Goodman Group Annual Report 2021
Contents
Chairman’s letter
Group CEO's letter
Corporate Governance 2021
Goodman Limited and its controlled entities
Appendix A – Goodman Logistics (HK) Limited
and its subsidiaries
Securities information
Glossary
Corporate directory
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4
6
7
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Annual Report 2021
01
Goodman Group
Chairman's letter
Goodman delivered another very strong result in 2021 during
an extremely challenging period. The Group’s focus was on
remaining agile, embracing opportunities and making positive
changes to the business. We redesigned how our teams work
to prioritise our people’s safety and wellbeing in the short term
and enable greater diversity in the longer term. We accelerated
our environmental, social and governance (ESG) targets, and
we met the demands of an escalating digital economy.
Success in such conditions was only possible due to the
Group’s strategy, executed consistently by our strong local
leadership teams in global markets, and galvanised with one
culture. Goodman’s business strategy is fit for purpose and
comprehensive. It is designed for the long term, with our
property investment strategy, environmental and sustainability
targets and remuneration aligned to provide profitable and
sustainable outcomes well into the future.
The right balance and focus
I believe one of Goodman’s greatest strengths lies in our
ability to balance our entrepreneurial spirit, which remains
undiminished, with the attention to detail required for
compliance and risk management, which is fundamental to
running a major ASX-listed company whose global operations
span 14 countries. Aiding this balance is the Group’s
remuneration strategy, which provides for all of our people
globally to be owners in the business, fostering an innovative
culture as well as creating a loyal and experienced team which
remains engaged and committed.
While the approach of investing in high quality locations has
been at the heart of Goodman’s strategy, it has been refined
over time to adapt to a changing world. For example, in recent
years, our asset sale program has allowed us to focus on infill
markets which can lead to higher intensification of use and a
greater focus on sustainability. Customer demand outweighs
supply for these properties, driven by consumers’ growing
expectation to have goods delivered quickly. The pandemic
saw significant growth in e-commerce penetration in all of our
markets and further accelerated this demand.
Strong and sustainable
A strong balance sheet to secure financial sustainability
remains central to the Group’s strategy. Low gearing levels
and strong liquidity give Goodman the ability to seize quality
opportunities as they arise, as well as providing a safeguard
during turbulent periods. The Group’s strong relationship with
our international Investment Partners, some of the world’s
largest pension and sovereign funds that co-invest with
Goodman globally, further strengthens our financial capability.
Within these Partnerships, we currently have $18.1 billion of
liquidity available for future investments in the form of equity
commitments, cash and undrawn debt. The strategy has
been critical, given the properties we seek to acquire are both
scarce and highly valuable.
Goodman’s long-term view impacts all areas of the business
and is key to our success. Our focus on infill markets
increases the scale and complexity of projects, which leads to
significantly longer development timeframes, often exceeding
five years. This is in addition to the time needed to achieve
the best urban regeneration outcomes at infill sites. Similarly,
our ever-increasing focus on environmental and sustainability
goals, which we expect will take five to 10 years to implement
and which will, in all likelihood, keep evolving over time, is
aligned with long-term financial sustainability.
The 10-year plan
Given the long-term nature of Goodman’s approach to
real estate investment, the Board has introduced a new
Long Term Incentive Plan for the senior leadership team
to provide even greater alignment with securityholders.
The new 10-year plan will see the testing and vesting periods
for the senior leadership team extended to four and 10 years,
respectively, with the existing plan’s three and five year
periods remaining in place for all other employees.
The new plan will position the Group with a market leading
remuneration structure which will help to retain key people
in a competitive labour market. It will support our objective
to influence our people’s long-term decision making and
will incorporate environmental and sustainability targets in
assessing our operational performance.
02
The Goodman Board
Our long serving Chairman, Mr Ian Ferrier, retired from the
Board at last year’s AGM. On behalf of the Board, I would like
to thank him for his outstanding service to Goodman over his
17-year tenure on the Board and, in particular, his leadership
during his 12 years as Chairman of the Board.
At this year’s AGM, Independent Directors, Ms Rebecca
McGrath and Mr David Collins, together with Executive
Director, Mr Danny Peeters, will be standing for re-election.
Ms Penny Winn has decided not to stand for re-election this
year and will retire from the Board at the conclusion of this
year’s AGM. On behalf of the Board, I would like to extend my
gratitude to Penny for her valuable contribution.
Goodman seeks to maintain a diverse Board with
the appropriate mix of skills, gender and geographic
representation, which will continue to be supported through
future appointments. Our focus specifically will be on meeting
our target of 40% representation for female Board members
and additionally, in view of the global nature of Goodman, we
will be seeking to appoint an internationally based director
with the appropriate skill base during the course of the current
financial year.
Goodman’s straightforward and transparent culture invites
the Board to have a constructive and open dialogue with
management. This enables directors to add value in their
deliberations with management, particularly in setting the
Group’s long-term growth strategy.
Many thanks
Goodman’s strong performance in 2021 was made possible
by the strength of our global leadership and teams around the
world. On behalf of the Board, I sincerely thank our people for
their commitment and determination in achieving this result.
I also extend my gratitude to all of our stakeholders for their
ongoing support and the Board for their valuable contribution.
Sincerely
Stephen Johns
Independent Chairman
Annual Report 2021
03
Goodman Group
Group CEO's letter
Future ready
We knew this year would bring changes, and we were well-
prepared for it. Our strong financial performance is the result of
our long-term consumer-centric approach to growth. In the area
of sustainability, we exceeded our own targets by reaching our
2025 goal of carbon neutrality four years ahead of schedule.
We’ve been making progressive choices early on and executed
them well which is putting us in good stead for the future.
The breadth of Goodman’s portfolio gives us valuable insights
across geographies. Globally, we saw evidence that our
consumer-centric approach to growth in targeted locations
was meeting our customers’ requirements for faster speed
to market. Meanwhile, our properties continued to provide
opportunities for automation and for higher utilisation of space
to allow for greater supply chain efficiency.
In 2021, as global uncertainty and market disruption
continued, our agile culture helped us embrace the changes
we were presented with. The determination and talent of our
people shone through.
Global online sales increased 30% in 2020*, fuelled by
e-commerce and the consumption of digital media and
services. We saw a direct correlation between consumer
habits, customer demand and our infill strategy.
Our results demonstrate this, as well as the team's alignment
of consistently owning properties around the world, close to
consumers. We delivered profitability, maintained a strong
balance sheet, and stayed true to our purpose.
Goodman’s financial highlights include an operating profit of
$1.2 billion, statutory profit of $2.3 billion and assets under
management that grew to $58 billion. Our balance sheet remains
strong with gearing of 6.8% and available liquidity of $1.9 billion.
Globally, our Group and Partnership properties achieved a
revaluation uplift of $5.8 billion, reflecting the portfolio’s quality.
Distribution per stapled security was 30.0 cents, and net tangible
assets increased 14.4% to $6.68 per security.
During the year, we have continued our concerted efforts to
make ESG fundamental to our business. Goodman’s long-
term approach continued to engender positive economic,
environmental and social outcomes for our business, our
stakeholders, and the world.
As providers of essential infrastructure, sustainability is crucial
to Goodman, and we are proud that our global operations
achieved carbon neutrality this year. Around the world, we made
progressive choices and changes to our operations to achieve
this carbon neutral result well ahead of our 2025 target.
Goodman has been positioning itself for this demand for
several years. Our strategy is serving our customers well and
during the year we leased 3.9 million sqm of space and our
portfolio occupancy remains high at 98.1%. This supported
the like for like growth in rental income of 3.2%.
Our Partnerships achieved average total returns of close to
18% while maintaining strong credit metrics. External assets
under management reached $54.0 billion with $18.1 billion
liquidity in the form of equity commitments, cash and undrawn
debt. We also completed $3.1 billion of asset sales across our
Partnerships – primarily in Europe where we have continued
to refine our investment strategy. Strong demand for industrial
assets globally resulted in demand from capital partners
seeking to invest alongside us.
Our financial performance, high occupancy rates and rental
growth are the result of our strategy to own assets in markets
where barriers to entry are high, land is scarce, and demand
is robust.
We continued to deploy capital to support our organic growth
strategy, which saw our development workbook increase to
$10.6 billion. Our global work-in-progress is spread across
73 projects and 12 countries, and the depth of demand is
leading to a high level of lease pre-commitment.
Goodman leads in the urban regeneration of logistics sites
around the world. This expertise has grown more valuable, with
the sustainable redevelopment of brownfield sites in high demand
by our customers and these are supported by the public sector.
Such developments are beneficial to the environment as they
reduce the amount of greenfield land developed and re-use
existing infrastructure. Infill locations, meanwhile, tend to be close
to consumers, which provides our customers with faster speed to
market and lower transport-related emissions.
Globally, Goodman continued to work with planning authorities
and local municipalities on innovative land use developments
– an endeavour of greater mutual benefit where planning
authorities are conducive to the increased utilisation of space,
including multi-storey buildings which comprise approximately
50% of what we are currently developing around the world.
*Source: Euromonitor 2020
04
Annual Report 2021
A sustainable impact
Forward thinking
We have witnessed the digitalisation of the world. And there’s
more to come.
Changing consumption habits have fundamentally changed
the volume and nature of demand from our customers – which
Goodman was, and still is, ready for. As a business that is
always looking to the future, we have been strengthening our
expertise and operational platform, while maintaining our strong
balance sheet over several years to facilitate this transition.
I couldn’t be prouder of the Goodman team’s commitment
to deliver high-quality, sustainable assets with integrity,
determination and innovation. We’re well prepared for the future.
Sincerely
Gregory Goodman
Group Chief Executive Officer
By accelerating the scale and timing of our sustainability
goals, Goodman achieved carbon neutral global operations
four years ahead of our 2025 target.
Collectively with our contractors and customers, we are
working to decarbonise our development projects. We believe
it is critical to examine the impact of steel, concrete and other
materials and processes. As such, we have established a
framework to measure the volume of embodied emissions in
our development projects globally. This will enable Goodman
to reduce or offset embodied carbon in the future.
Our sustainability goals are progressive, appropriate and
aligned with our customers’ aspirations. They reflect our
obligation to act decisively on climate change, to reduce the
risk of obsolescence and to ensure the future performance of
our assets.
Throughout the year, Goodman Foundation remained
steadfast in its efforts to help its charitable partners not only
survive but rise to the challenge of the pandemic. It was a
time to back our many charity partners who knew what their
communities needed most, and to be generous and flexible in
how we supported them through one of the most challenging
years imaginable.
Flexible and inclusive
Flexible working is the new normal at Goodman. We have
created an agile, technology-enabled working environment,
which prioritises health, safety and wellbeing for our people
around the world. Flexible working suits our culture and global
operations. It also protects our teams and increases our
productivity and diversity. Furthermore, it opens up opportunities
for our people – particularly caregivers and parents.
We view our people as owners in the business. All Goodman
employees participate in our Long Term Incentive Plan (LTIP),
which aligns their interests to those of our securityholders
and helps us to retain key talent and maintain low turnover.
The financial framework around our LTIP encourages long-
term decision making and underpins personal responsibility.
We are committed to inclusion and diversity. Our target is to
increase women in senior roles to 40% by 2030 so that our
capable female leaders, mentors and managers can continue
to have a widespread and meaningful impact on our culture.
05
Goodman Group
Corporate Governance 2021
Goodman Group (Goodman or Group) is a triple stapled entity
comprised of the Australian company, Goodman Limited
(GL), the Australian trust, Goodman Industrial Trust (GIT) and
the Hong Kong company, Goodman Logistics (HK) Limited
(GLHK). The Boards of GL and Goodman Funds Management
Limited as the responsible entity of GIT comprise the same
directors while GLHK has a distinct Board with some overlap
(together they are referred to as the Boards).
The Goodman Boards and management team are committed
to the highest standards of corporate governance and
recognise that an effective corporate governance culture
is critical to the long-term performance of the business.
Goodman’s corporate governance framework underpins our
commitment to maximise long-term sustainable value for
Securityholders through:
+
+
+
+
Effective controls, risk management, transparency and
corporate responsibility
Strategic planning and alignment of the interests of
employees, whom we refer to as team members, with that
of Securityholders and other stakeholders
Meeting stakeholder expectations of a global ASX listed
entity through acting lawfully and responsibly while prudently
managing both financial and non-financial risk, and
Seeking to ensure we are an organisation that acts with
integrity by promoting a culture which values the principles
of honesty, fairness, transparency and ethical behaviour.
The diagram below shows an overview of Goodman’s Corporate
governance framework.
Goodman Group Boards
Risk and
Compliance
Committee
Audit
Committee
Remuneration
Committee
Nomination
Committee
Group CEO
Group Investment
Committee
Finance and Treasury
Committee
Corporate Services
Committee
Goodman’s Corporate Governance Statement can be viewed on
our website at goodman.com/who-we-are/corporate-governance
Goodman’s core corporate governance framework
documents including Charters and Policies are available at
goodman.com/who-we-are/corporate-governance. Additional
information for securityholders is available at the Goodman
Investor Centre at goodman.com/investor-centre
06
Goodman Limited and its controlled entities
Consolidated financial report for the year ended 30 June 2021
Annual Report 2021
CONTENTS
Directors’ report
Lead auditor’s independence declaration
Consolidated statements of financial position
Consolidated income statements
Consolidated statements of comprehensive income
Consolidated statements of changes in equity
Consolidated cash flow statements
Notes to the consolidated financial statements
Basis of preparation
Basis of preparation
1
Results for the year
2
Profit before income tax
3
4
Profit per security
Segment reporting
Taxation
5
Operating assets and liabilities
6
Property assets
7
Receivables
8 Contract balances
9
Assets held for sale
10 Payables
11 Provisions
12 Property, plant and equipment
13 Leases
14 Goodwill and intangible assets
Capital management
15 Net finance income/(expense)
16
Interest bearing liabilities
17 Other financial assets and liabilities
18 Financial risk management
19 Dividends and distributions
Issued capital
20
Other items
21 Notes to the cash flow statements
22
Equity attributable to Goodman Limited
and non-controlling interests
23 Controlled entities
24 Related parties
25 Commitments
26 Auditors’ remuneration
27 Parent entity disclosures
28 Events subsequent to balance date
Directors’ declaration
Independent auditor’s report
Appendix A – Goodman Logistics (HK) Limited
financial report for the year ended 30 June 2021
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07
Goodman Group
Directors’ report
The directors (Directors) of Goodman Limited
(ABN 69 000 123 071) and Goodman Funds Management
Limited (GFML), the responsible entity for Goodman Industrial
Trust (ARSN 091 213 839), present their Directors’ report
together with the consolidated financial statements of
Goodman Limited and the entities it controlled (Goodman or
Group) and the consolidated financial statements of Goodman
Industrial Trust and the entities it controlled (GIT) at the end of,
or during, the financial year ended 30 June 2021 (FY21) and
the audit report thereon.
Shares in Goodman Limited (Company or GL), units in
Goodman Industrial Trust (Trust) and CHESS Depositary
Interests (CDIs) over shares in Goodman Logistics (HK) Limited
(GLHK) are stapled to one another and are quoted as a single
security on the Australian Securities Exchange (ASX). In respect
of stapling arrangements, Australian Accounting Standards
require an acquirer to be identified and an in-substance
acquisition to be recognised and accordingly Goodman Limited
is identified as having acquired control over the assets of GIT
and GLHK. The consolidated financial statements of Goodman
Limited therefore include the results of GIT and GLHK.
As permitted by the relief provided in Australian Securities
& Investments Commission (ASIC) Instrument 20-0568, the
accompanying consolidated financial statements present both
the financial statements and accompanying notes of Goodman
and GIT. GLHK, which is incorporated and domiciled in
Hong Kong, prepares its financial statements under Hong
Kong Financial Reporting Standards and the applicable
requirements of the Hong Kong Companies Ordinance and
accordingly the financial statements of GLHK have not been
included as adjacent columns in the consolidated financial
statements. The financial statements of GLHK have been
included as an appendix to this financial report.
GFML, as responsible entity for the Trust, is solely responsible
for the preparation of the accompanying consolidated financial
report of GIT, in accordance with the Trust’s Constitution and
the Corporations Act 2001.
08
Annual Report 2021
OPERATING AND FINANCIAL REVIEW
The business capabilities are supported by:
Principal activities
Goodman is a global integrated property group and one of the
world’s leading listed industrial property groups. Goodman is
focused on its proven business model of owning, developing and
managing industrial property and business space in its chosen
key markets around the world.
The principal activities of Goodman during the financial year
were investment in directly and indirectly held industrial property,
investment management, property services and property
development. Goodman’s key operating regions during the
financial year were Australia and New Zealand, Asia, Continental
Europe, the United Kingdom and the Americas.
Goodman strategy
DEVELOP
Develop properties in key locations to
meet our customers’ business needs
N
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1. Quality partnerships – develop and maintain strong
relationships with key stakeholders including customers,
investment partners, suppliers and employees.
2. Quality product and service – deliver high quality product
and customer service in key logistics markets globally by
actively leveraging Goodman’s industrial sector expertise,
development and management experience and global
operating platform.
3. Culture and brand – promote Goodman’s unique brand
and embed Goodman’s core values across each operating
division to foster a strong and consistent culture. The core
values are:
+ Innovation – New ideas push our business forward.
We focus on the future, proactively looking for
new opportunities and improved solutions for our
stakeholders that will make the world a better place
for all of us.
+ Determination – Determination gets things done.
We are motivated by excellence and work hard to achieve
it, actively pursuing the very best outcomes
for our stakeholders.
+ Integrity – We have integrity, always. We work inclusively
and transparently, balancing the needs of our business
and our people, with the needs of the community and
those we do business with.
+ Sustainability – We’re building our business for the long
term. That’s why we consider the planet and all the people
on it in everything we do. Our initiatives demonstrate
our ongoing commitment to having a positive economic,
environmental and social impact on the world.
Manage and invest in high-quality
real estate globally for our investment partners
4. Operational efficiency – optimise business resources
to maximise effectiveness and drive efficiencies.
MANAGE
Goodman’s purpose is to make space for its stakeholders’
ambitions. This purpose is executed through Goodman’s
integrated business capabilities model – ‘own+develop+manage’,
where its customers’ need for sustainable solutions and
service excellence in high quality locations, is at the centre.
5. Capital efficiency – maintain active capital
management to facilitate appropriate returns and
sustainability of the business.
09
Goodman Group
Directors’ report
Operating and financial review (continued)
Financial highlights
Revenue and other income before fair value adjustments on investment properties ($M)
2,444.1
1,982.1
23.3%
Fair value adjustments on investment properties including share of adjustments for Partnerships ($M)
1,358.9
651.3
108.6%
2021
2020 Change %
Revenue and other income ($M)
Profit attributable to Securityholders ($M)
Statutory profit per security – basic (¢)
Operating profit ($M)
Operating profit per security (operating EPS) (¢)1
Dividends/distributions in relation to the year ($M)
Dividends/distributions per security in relation to the year (¢)
Weighted average number of securities on issue (M)
Total equity attributable to Securityholders ($M)
Number of securities on issue (M)
Net tangible assets per security ($)
Net assets per security ($)
External assets under management ($B)
Total assets under management ($B)
Development work in progress ($B)2
Gearing (%)3
Interest cover4 (times)
Liquidity ($B)
Weighted average debt maturity (years)
44.4%
53.7%
52.2%
15.0%
14.1%
1.0%
–
1.0%
14.2%
1.0%
14.4%
13.0%
12.5%
12.2%
63.1%
3,803.0
2,633.4
2,311.9
1,504.1
125.4
82.4
1,219.4
1,060.2
65.6
554.2
30.0
57.5
548.5
30.0
1,844.2
1,826.0
13,161.5
11,520.6
1,847.4
1,828.4
6.68
7.12
54.0
57.9
10.6
6.8
63.7
1.9
6.3
5.84
6.30
48.0
51.6
6.5
7.5
15.3
2.8
5.8
1.
2.
3.
4.
Operating profit per security (operating EPS) is the operating profit divided by the weighted average number of securities on issue during FY21, including securities
relating to performance rights that have not yet vested but where the performance hurdles have been achieved. Operating profit comprises profit attributable to
Securityholders adjusted for net property valuations gains, non-property impairment losses, net gains/losses from the fair value movements on derivative financial
instruments and unrealised fair value and foreign exchange movements on interest bearing liabilities and other non-cash adjustments or non-recurring items
e.g. the share based payments expense associated with Goodman’s Long Term Incentive Plan (LTIP).
As it is closely aligned with operating cash generation, the Directors consider that Goodman’s operating profit is a key measure by which to examine the underlying
performance of the business, notwithstanding that operating profit is not an income measure under International Financial Reporting Standards.
Development work in progress (WIP) is the end value of active developments across Goodman and its investments in associates and joint ventures (referred to
as Partnerships).
Gearing is calculated as total interest bearing liabilities over total assets, both net of cash and the fair values of certain derivative financial instruments included in
other financial assets of $134.1 million (2020: $292.5 million). Total interest bearing liabilities are grossed up for the fair values of certain derivative financial instruments
included in other financial liabilities of $62.3 million (2020: $194.0 million).
Interest cover is operating profit before net finance expense (operating) and income tax (operating) divided by net finance expense (operating). The calculation is in
accordance with the financial covenants associated with the Group’s unsecured bank loans and includes certain adjustments to the numerator and denominator.
10
Annual Report 2021
Key operational highlights for FY21:
Property investment:
+
+
+
Investment earnings of $411.5 million (2020: $425.2 million)
$57.9 billion of total assets under management (AUM),
of which the Group owns a whole or a part share
3.2% like for like growth in net property income (NPI)
in Partnerships
+
98% occupancy across the Group and Partnerships.
Management:
+
Management earnings of $459.1 million (2020: $511.2 million)
+ $54.0 billion of external AUM in Partnerships
+ Partnerships reported 17.7% weighted average total return
on net assets.
Development:
+ Development earnings of $717.9 million (2020: $575.7 million)
+ $10.6 billion of development WIP (end value)
+ $6.6 billion of development commencements.
Overview
The Group has been able to adapt to the challenges that
FY21 has brought and has continued to grow the business
sustainably for the long term.
The global pandemic has accelerated the changes in
consumption trends that had already begun across the
physical and digital spaces and this has increased demand
for warehouse and logistics facilities. This has benefitted the
Group’s existing portfolios in FY21, which have reported growth
in rental income and maintained high occupancy levels. It has
also given the Group confidence to commence a number of
new developments, particularly multi-storey and higher intensity
buildings within its urban locations, and these developments are
providing essential real estate infrastructure for the long-term
requirements of those cities and the Group’s customers.
This increase in development activity has been a key driver
of the Group’s operating performance for FY21, with operating
profit increasing by 15.0% to $1,219.4 million. This equates
to an operating EPS of 65.6 cents, up 14.1% on FY20.
The customer demand for industrial space has led to
another strong property valuation result with total property
uplifts, including the Group’s share of Partnerships, for FY21
of $1,308.5 million. Across FY21, the weighted average
capitalisation rate of the stabilised assets in the Goodman
portfolios contracted from 4.9% to 4.3%.
The operating performance and property valuation results
have contributed to Goodman’s statutory profit attributable
to Securityholders for FY21 increasing by $807.9 million to
$2,311.9 million. The statutory profit is reported net of the
accounting expense of the Goodman LTIP of $268.8 million
and included a $55.0 million fair value gain on derivatives.
These items, as well as the property valuation results, are
excluded from the calculation of operating profit.
Goodman has achieved this result while maintaining credit
metrics in accordance with its financial risk management policy.
At 30 June 2021, gearing was 6.8% and the funds available
to the Group for future investment were $1.9 billion. Dividends
and distributions relating to FY21 were maintained at 30 cents
per security, equivalent to 46% of operating profit. The cash
retained in the business is consistent with the financial risk
management targets and is considered appropriate given the
significant development activity and the commensurate growth
in investments that is expected in the near term.
11
Goodman Group
Directors’ report
Operating and financial review (continued)
Analysis of performance
Goodman’s key operating regions are Australia and New Zealand
(reported on a combined basis), Asia (Greater China and Japan),
Continental Europe (with the vast majority of assets located in
Germany and France), the United Kingdom and the Americas
(North America and Brazil). The operational performance
can be analysed into property investment earnings,
management earnings and development earnings, and the
Directors consider this presentation of the consolidated
results facilitates a better understanding of the underlying
performance of Goodman given the differing nature of and
risks associated with each earnings stream.
Property investment earnings consist of gross property income
(excluding straight lining of rental income), less property
expenses, plus Goodman’s share of the operating results of
Partnerships that is allocable to property investment activities
which excludes the Group’s share of property revaluations
and derivative mark to market movements. The key drivers
for maintaining or growing Goodman’s property investment
earnings are increasing the level of AUM (subject also to
Goodman’s direct and indirect interest), maintaining or
increasing occupancy and rental levels within the portfolio, and
controlling operating and financing costs within Partnerships.
Management earnings relate to the revenue from managing
both the property portfolios and the capital invested
in Partnerships (management income). This includes
performance related revenues but excludes earnings from
managing development activities in Partnerships, which
are included in development earnings. The key drivers for
maintaining or growing management earnings are activity
levels, asset performance, and increasing the level of AUM, which
can be impacted by property valuations and asset disposals and
is also dependent on liquidity including the continued availability
of third party capital to fund both development activity and
acquisitions across Goodman’s Partnerships.
Development earnings consist of development income, plus
Goodman’s share of the operating results of Partnerships
that is allocable to development activities, plus net gains or
losses from disposals of investment properties and equity
investments that are allocable to development activities,
plus interest income on loans to development joint ventures,
less development expenses. Development income includes
development management fees and also performance related
revenues associated with managing individual development
projects in Partnerships. The key drivers for Goodman’s
development earnings are the level of development activity,
land and construction prices, property valuations and
the continued availability of third party capital to fund
development activity.
12
Annual Report 2021
The analysis of Goodman’s performance and the reconciliation of the operating profit to profit attributable to Securityholders for
FY21 are set out in the table below:
Analysis of operating profit
Property investment earnings
Management earnings
Development earnings
Operating expenses
Net finance expense (operating)1
Income tax expense (operating)2
Operating profit
Adjustments for:
Property valuation related movements
– Net gain from fair value adjustments on investment properties
– Share of fair value adjustments attributable to investment properties in Partnerships after tax
– Deferred tax on fair value adjustments on investment properties
Fair value adjustments related to liability management
– Fair value adjustments on derivative financial instruments
– Share of fair value adjustments on derivative financial instruments in Partnerships
Other non-cash adjustments or non-recurring items
– Share based payments expense
– Straight lining of rental income and tax deferred adjustments
Note
2021
$M
2020
$M
411.5
459.1
717.9
425.2
511.2
575.7
1,588.5
1,512.1
(294.0)
(292.3)
1,294.5
1,219.8
(16.4)
(58.7)
(70.8)
(88.8)
1,219.4
1,060.2
63.1
1,295.8
(50.4)
1,308.5
83.9
(28.9)
55.0
(268.8)
(2.2)
(271.0)
45.2
591.7
(15.6)
621.3
(9.4)
16.2
6.8
(164.0)
(20.2)
(184.2)
6(e)
6(f)
5(a)
15
6(f)
2
Profit for the year attributable to Securityholders
2,311.9
1,504.1
1. Net finance expense (operating) excludes derivative mark to market and unrealised foreign exchange movements.
2.
Income tax expense (operating) excludes the deferred tax movements relating to investment property valuations and other non-operating items, such as the Group’s LTIP.
13
Goodman Group
Directors’ report
Operating and financial review (continued)
Analysis of performance (continued)
Property investment
Property investment earnings in FY21 of $411.5 million
decreased by 3% on the prior year and comprised 26% of the
total earnings (2020: 28%).
Analysis of property investment earnings:
Direct
Partnerships
Key metrics:
Weighted average capitalisation rate (WACR) (%)
Weighted average lease expiry (WALE) (yrs)
Occupancy (%)
2021
$M
2020
$M
79.3
78.5
332.2
346.7
411.5
425.2
2021
2020
4.3
4.5
98
4.9
4.5
98
The Group’s property portfolios are concentrated in large,
urban centres around the world where demand from
customers has put pressure on land use and availability.
As a consequence of the acceleration of consumer
purchasing habits to online shopping, Goodman has seen
increased demand for space from customers in the food,
consumer goods and logistics sectors, particularly related to
e-commerce operators and those transitioning to online. At
the same time, customers have continued to invest in order
to improve the efficiency of their supply chains. In addition
to storage and movements of goods, data centres have also
emerged as a rapidly growing user of industrial property.
The directly held properties are primarily in Australia and have
potential for significant long-term growth from redevelopment
to more intense or higher and better uses. The net income
from the Group’s directly held properties was similar to the
prior year as the impacts of rental growth, completion of
developments and acquisitions were offset by assets sold in
the current and prior periods.
The more significant component of the Group’s property
investment earnings was from its cornerstone interests in the
Partnerships. The earnings from the Group’s share of these
stabilised assets decreased by $14.5 million to $332.2 million
compared to the prior year. The impact of disposals in FY20
and FY21, which included properties in central and eastern
Europe, and the foreign currency translation on the overseas
earnings resulted in a decrease in earnings of $29.0 million.
This was partly offset by the stabilisation of developments in
FY20 and FY21, as the Group has continued to invest in the
Partnerships to fund its share of those developments and
rental income growth from existing stabilised properties. Net
property income from the Partnership portfolios in FY21 was
up by over 3% on a like for like basis compared to FY20 and
average occupancy was maintained at 98%.
During FY21, the Group’s share of property valuations from
the stabilised portfolios (before deferred tax) was $1,174.9
million, which included valuation uplifts of $164.2 million
on developments that reached completion during the
year. Valuation gains occurred in all regions and whilst the
rental income growth and development completions were
contributors to these uplifts, the primary driver, especially in
the second half of the financial year, was capitalisation rate
compression. At 30 June 2021, the WACR for the Group’s
portfolios was 4.3%, compared to 4.9% at the start of FY21.
The operating return on Goodman’s investment in the
stabilised portfolios held by the Partnerships was 4.3%
compared to 4.9% in FY20, as the growth in net property
income was offset by the impacts of the valuation uplifts
that increased the investment base. The returns from the
Partnerships were also impacted by the level of debt in
each Partnership. Gearing was maintained at the lower end
of target ranges, which continued to be appropriate given
the ongoing development activity and the aim of Goodman
and its investment partners to position the Partnerships for
sustainable long-term growth.
14
Annual Report 2021
Management
Development
Management earnings in FY21 of $459.1 million decreased
by 10% compared to the prior year and comprised 29% of
total operating earnings (2020: 34%). This was due to lower
performance fee revenue recognised in FY21 and the net
adverse impact of the translation of the overseas earnings
compared to the prior year. The reduction in performance
related revenue was the result of the timing of calculation
and recognition of fees. With the strong performance of the
Partnerships in recent times, a significant backlog of potential
fees may be earned in the future should conditions remain
stable. The decline was partially offset by the higher base
management fees as a result of the increased AUM. During
FY21, external AUM increased by 12% to $54.0 billion from
$48.0 billion as set out below:
External assets under management
At the beginning of the year
Acquisitions
Disposals
Capital expenditure (developments)
Valuations
Foreign currency translation
At the end of the year
2021
$B
48.0
3.1
(3.1)
2.1
5.6
(1.7)
54.0
Excluding performance related income, management fee
income earned from the overall management of the Group’s
Partnerships was $310.1 million (2020: $304.0 million). Base
management fee income increased in line with the external
AUM, noting that the majority of the disposals occurred in
the early part of the year and a significant component of the
valuation uplifts were recorded at 30 June 2021. The base
management fee income was supplemented by both property
services income, which was based on the gross property
income in Partnerships, and other income such as leasing fees
and transactional fees.
For FY21, the Partnerships reported a weighted average total
return on net assets of 17.7% (2020: 16.6%). The consistently
high Partnership returns over the past few years again resulted
in a strong contribution from performance fee revenue of
$149.0 million; however, the timing of the assessment dates
meant this was down on the prior period (FY20: $207.2
million). These performance fees arose primarily in Australia/
New Zealand, Asia and Continental Europe.
In FY21, development earnings were $717.9 million (excluding
revaluation gains), an increase of 25% on the prior year and
comprised 45% of total operating earnings (2020: 38%).
This increase would have been greater but for the adverse
impact on earnings from the foreign currency translation of
overseas earnings.
The increase in the Group’s earnings has primarily been
volume driven and the progress and execution of the Group’s
developments continues to be robust with commencements
in FY21 of $6.6 billion (FY20: $4.5 billion). At 30 June 2021,
WIP (based on end value) had increased to $10.6 billion (FY20:
$6.5 billion) across 73 projects with a forecast yield on cost
of 6.7% and a number of those projects will also generate
income for FY22 and FY23.
This increase in development volumes has more than offset
the impact on income arising from the longer development
timeframes required for the size and scale of current projects,
given the concentration in urban locations. Approximately 55%
of WIP at 30 June 2021 was multi-storey and the average
duration of projects in WIP was around 19 months, which implied
an annualised production rate for the workbook of $6.6 billion.
Given the strong customer demand and the continued
focus on urban centres, where the supply of available
land is restricted, the Group has been able to commence
certain projects prior to securing a pre-lease commitment.
Nevertheless, of the $6.6 billion of project commencements
during the year, 57% had pre-committed leases and of the
development completions during FY21 of $2.4 billion (FY20:
$2.4 billion), 96% had pre-committed leases.
The Group’s development earnings arise in each operating
segment and from a number of different transaction types,
often dependent on the nature of the Partnership. In most of
the operating segments, development earnings are a mix of
development management income, including performance
related income, and the Group’s share of transactional profits
reported by the Partnerships. The majority of inventory disposals
and fixed price contract income occurred in Continental Europe,
where the local Partnerships frequently acquire completed
developments from Goodman; however, there were inventory
disposals in Australia and the United Kingdom during FY21.
Consistent with the prior year, the majority of development
activity in FY21 was undertaken by or for the Partnerships and
third parties (81% of WIP at 30 June 2021).
15
Goodman Group
Directors’ report
Operating and financial review (continued)
Analysis of performance (continued)
Operating expenses
For FY21, operating expenses increased to $294.0 million from
$292.3 million, despite a $10 million decrease from the impact
of foreign currency translation on overseas expenses. The
majority of the operating expenses related to remuneration
costs which increased to $210.8 million from $203.7 million as
a result of modest inflation pressure and cash incentives paid
as a result of the Group’s overall performance and include an
allowance for a sustainability initiative to incentivise employees
to switch to electric vehicles. Headcount was maintained in
most divisions. The Group’s aim is to keep base remuneration
costs relatively steady, and instead use variable remuneration
to incentivise staff.
Administrative expenses decreased to $83.2 million from
$88.9 million primarily due to the impacts of foreign currency
translation and savings in travel expenses.
Net finance expense (operating)
Net finance expense (operating), which excluded interest
income on loans to development joint ventures, derivative
mark to market and unrealised foreign exchange movements,
decreased to $16.4 million from $70.8 million. This was
due to lower borrowing expenses on the Group’s foreign
denominated loans and derivatives due to the impact of the
higher Australian dollar. The foreign exchange driven decline
in investment, development and management earnings
described above has been offset in the benefits recorded
in the finance expense. This is consistent with the Group’s
hedging strategy that has been in effect for many years. In
some prior periods, the borrowing expenses where higher but
that offset the translation gains in revenues. The redemption
of certain 144A notes also contributed to the decline in net
finance expenses. These factors were partly offset by the
lower interest received on the Group’s cash balances and
lower capitalised interest due to declining interest rates.
Capital management
Interest bearing liabilities
At 30 June 2021, the Group’s available debt facilities and fixed
rate long-term bonds, which totalled $3.1 billion (of which
$2.1 billion had been drawn), had a weighted average maturity
of 6.3 years. The Group’s cash and undrawn bank facilities
totalled $1.9 billion.
At 30 June 2021, gearing was 6.8% (2020: 7.5%), which
continued to be at the lower end of the Group’s policy range of
0% to 25%. Interest cover was 63.7 times (2020: 15.3 times)
and the Group continued to have significant headroom relative
to its financing covenants. Goodman’s credit ratings were
unchanged over the year.
During FY21, the Group and its Partnerships refinanced
$5.4 billion of bank debt and secured third party equity
commitments of $1.8 billion to provide liquidity for ongoing
acquisition and development opportunities. At 30 June
2021, the Partnerships had $18.1 billion in available cash,
undrawn bank facilities and equity commitments, noting that
the majority of the equity commitments remain subject to
the approval by the relevant investment partners, including
Goodman, of proposed property investments for which the
funding is required.
Dividends and distributions
The Group’s distribution for FY21 was maintained at 30 cents
per security, a pay-out ratio of 46%, with 15 cents paid on 25
February 2020 and 15 cents to be paid on 26 August 2021. This
pay-out ratio has assisted the Group in retaining sufficient funds
for its ongoing development activity and in keeping gearing at
an appropriate level, within the desired range. The distribution
reinvestment plan was not in operation during the year.
In respect of the separate components that comprise the 30
cents per security:
Income tax expense (operating)
+ Goodman Limited did not declare any dividends during the
Income tax expense (operating) for FY21 at $58.7 million
(2020: $88.8 million) decreased compared to the prior year.
A significant proportion of Goodman’s earnings related to
GIT and its controlled entities, which, as trusts, are ‘flow
through’ entities under Australian tax legislation, meaning
Securityholders (and not GIT) are taxed on their respective
share of income. However, the decrease in the tax expense
was primarily due to the nature and location of the Group’s
development revenues.
financial year (2020: $nil).
+ Goodman Industrial Trust declared and accrued distributions
of 24.0 cents per security (2020: 26.0 cents per security),
amounting to $443.4 million (2020: $475.4 million).
+ GLHK declared and accrued a dividend of 6.0 cents per
security (2020: 4.0 cents per security), amounting to
$110.8 million (2020: $73.1 million).
16
Annual Report 2021
Summary of items that reconcile operating
profit to statutory profit
Property valuation related movements
The net gain from fair value adjustments on investment
properties directly held by Goodman was $63.1 million
(2020: $45.2 million). The uplift in value was primarily due to
the contraction in capitalisation rates.
Goodman’s share of net gains from fair value adjustments
before deferred tax attributable to investment properties in
Partnerships was $1,335.4 million (2020: $625.0 million), a
reflection of the quality of the property portfolios and the
continued customer and investor demand for industrial
assets. This valuation uplift comprised $1,111.8 million in
respect of the stabilised portfolio (including valuation uplifts
on developments that stabilised during the year) and $223.6
million (2020: $182.0 million) from investment properties that
were still under development at 30 June 2021.
At 30 June 2021, the WACR for Goodman’s stabilised property
portfolios (both directly held and Partnerships) decreased from
4.9% to 4.3%.
The valuation gains of $223.6 million from investment
properties that were still under development at 30 June 2021
included gains of $95.9 million that related to buildings under
development that were subject to conditional contracts for
sale. In prior years, properties under development were
typically not revalued prior to completion due to the shorter
development periods and, as a consequence, the entire
development profit was recognised in the Group’s statutory
profit in the year the contract was completed. This profit was
also reported as Development earnings in the analysis of the
Group’s operating profit.
Given the lengthening time periods for the Group’s
developments, it has become increasingly common that
at reporting dates properties under development that have
incomplete contracts for disposal are subject to more
significant fair value movements. These movements would be
reflected in the Group’s statutory profit but would not form part
of that year’s operating profit. The Board intends, however,
that any property valuation gains associated with properties
contracted for sale that arise during the period from the
commencement of the development until the date of disposal
are included as Development earnings for the purposes of
the Group’s operating profit calculation, but this should only
occur in the reporting period when the conditions have been
satisfied and the properties have been derecognised. This will
usually be upon cash settlement, which reinforces the principle
for determining operating profit based on cash realisation.
Accordingly, the fair value gains of $95.9 million in FY21 that
related to buildings under development subject to conditional
contracts for sale at 30 June 2021 will be reflected in operating
profit, but only in the future reporting period when the properties
are derecognised. In the future period when this occurs, the
reconciliation of the Group’s statutory profit to the Group’s
operating profit will include a separate line item under the
property valuation related movements. This way, the valuation
increases are not double counted when considering total gains
generated over multiple periods. This operating profit treatment
is consistent with the approach applied to a similar property
disposal by one of the Partnerships that was contracted in FY19
and completed in FY20. In respect of the current financial year,
there were no similar development completions.
There were no impairment losses associated with the Group’s
inventories during FY21.
Fair value adjustments and unrealised foreign currency
exchange movements related to liability management
The amount reported in the income statement associated with
the Group’s derivative financial instruments was a net gain of
$55.0 million (2020: $6.8 million net gain). This was due to the
strengthening of the Australian dollar against the currencies
where the Group has its principal operations.
Under the Group’s policy, it continues to hedge between
65% and 90% of the net investment in its major overseas
operations. Where Goodman invests in foreign assets,
it will borrow in that currency or enter into derivative
financial instruments to create a similar liability. In so doing,
Goodman reduces its net asset and income exposures to
those currencies. The unrealised fair value movement of the
derivative financial instruments (up or down) is recorded in the
income statement; however, the foreign currency translation
of the net investment that is being hedged is recorded directly
in reserves. In FY21, the movement in reserves attributable to
foreign currency movements was a loss of $279.4 million.
Other non-cash adjustments or non-recurring items
The principal other non-cash adjustments or non-recurring
items for FY21 related to the share based payments expense of
$268.8 million for Goodman’s LTIP, which increased from $164.0
million in FY20. The increase primarily related to the fact that the
Goodman Group security price increased from $14.85 to $21.17
during FY21 compared to a decrease from $15.03 to $14.85 in
FY20 and also the impact of a higher vesting probability applied
to the awards made in FY20 that are subject to an operating EPS
target that will be measured over the year ending 30 June 2022.
17
Goodman Group
Directors’ report
Operating and financial review (continued)
Statement of financial position
Stabilised investment properties
2,022.2
1,797.9
Cornerstone investments in Partnerships
8,668.6
7,807.3
2021
$M
2020
$M
Development holdings
Intangible assets
Cash and cash equivalents
Other assets
Total assets
Interest bearing liabilities
Other liabilities
Total liabilities
Net assets
3,645.1
3,140.1
822.6
845.8
920.4
1,781.9
788.1
765.2
16,867.0
16,138.2
2,060.3
2,938.5
1,645.2
1,679.1
3,705.5
4,617.6
13,161.5
11,520.6
The carrying value of wholly owned, stabilised investment
properties increased by $224.3 million to $2,022.2 million at
30 June 2021. This was primarily due to valuation uplifts
of $63.1 million and the net impact of acquisitions, capital
expenditure, disposals and transfers to/from development.
The value of Goodman’s cornerstone investments in
Partnerships, which excludes the Group’s share of their
development assets, increased by $861.3 million to $8,668.6
million, primarily due to the valuation uplifts across the portfolios.
The impacts of the stabilisations of development properties of
$267.9 million (primarily in GNAP) and the associated equity
contributed was offset by the impact of foreign currency
translation of $279.2 million. The impact of the sale of central and
eastern European assets went partially to debt reduction so it
did not materially impact the Group’s overall investments.
Goodman’s development holdings, which include the Group’s
share of development assets in the Partnerships as well as the
directly held properties, increased during the year by $505.0
million to $3,645.1 million. This was a result of both the increased
activity levels that occurred in most regions and valuation uplifts
associated with investment properties under development in the
Partnerships (primarily in Asia and North America). The strong
levels of development activity are also reflected in the level of the
Group’s development WIP (end value), which increased over the
year from $6.5 billion to $10.6 billion at 30 June 2021.
The principal goodwill and intangible asset balances were in
Continental Europe and the United Kingdom. The movement
during FY21 related to changes in foreign currency exchange
rates and there were no impairments or reversals of impairments.
18
During FY21, the Group redeemed USD denominated notes of
US$453.8 million out of its existing cash. On a net basis, the
Group’s cash and interest bearing liabilities were $1,139.9 million
at 30 June 2021 compared to $1,156.6 million at 30 June 2020.
Other assets included receivables and the fair values of
derivative financial instruments that are in an asset position.
The derivative financial instruments, both those in an asset
and those in a liability position, are in place to hedge the
Group’s interest rate and foreign exchange rate risks.
Other liabilities included trade and other payables, the
provision for dividends/distributions to Securityholders, fair
values of derivative financial instruments that are in a liability
position and tax liabilities (including deferred tax).
Cash flows
Operating cash flows
Investing cash flows
Financing cash flows
(excluding dividends and distributions)
Dividends and distributions paid
Net (decrease)/increase in cash
and cash equivalents held
Cash and cash equivalents
at the beginning of the year
Effect of exchange rate
fluctuations on cash held
Cash and cash equivalents
at the end of the year
Operating cash flows
2021
$M
2020
$M
1,114.7
1,156.9
(549.9)
(306.4)
(797.7)
(114.6)
(551.4)
(784.3)
(546.3)
189.6
1,792.8
1,607.1
(88.1)
(3.9)
920.4
1,792.8
Operating cash flows of $1,114.7 million were slightly lower
than the prior year. This was a result of lower cash receipts
from portfolio performance fees, which was offset by an
increase in the net development cash flows and lower net
cash outflows associated with the Group’s finance costs.
The receipts of portfolio performance fees are dependent on the
assessment dates for the Partnerships although revenues may
be recognised in advance of the assessment dates where the
consistently strong Partnership returns mean that the receipt of
revenue is highly probable. The prior year included cash receipts
from portfolio performance fees in respect of certain of the larger
Partnerships. In some cases, cash from management activities
may be received in advance of the services being provided; as a
result, these revenues will be reflected in the income statement
later than the receipt. Such cash receipts occurred in FY20 in
advance of revenue recognised in FY21 in the income statement.
Annual Report 2021
The net development cash inflow was $612.9 million (2020:
$412.4 million), although both the gross receipts from
development activities of $1,560.3 million (2020: $1,031.4
million) and the gross payments for development activities of
$947.4 million (2020: $619.0 million) were higher than the prior
year. This arose in part due to the nature and structure of the
development activities and also the timing of completions,
especially in respect of the developments that are undertaken
directly by the Group and subsequently sold to Partnerships or
third parties. For FY21 overall, Goodman undertook a similar
percentage of its total development activities in joint ventures
and Partnerships relative to the prior year. When Partnerships
require funding for development activities then the Group’s
share of the investment is reported in investing cash flows.
The distributions received from Partnerships in FY21 were
$536.9 million, increased from $462.2 million in the prior year.
The Partnerships continued to distribute their net cash flows
from property investment (rental income) but the primary
reason for this increase was the Group’s share of development
activities in the Partnerships.
Investing cash flows
Investing cash flows primarily related to the net investments in
Partnerships. In FY21 the Group invested $790.3 million (2020:
$806.6 million) across all regions in order to fund new and
ongoing developments. Capital returns from the Partnerships
reflected capital management initiatives by certain
Partnerships, with the receipts often used to fund investments
in other Partnerships.
The investment property acquisitions of $192.3 million (2020:
$234.3 million) were in Asia and the United Kingdom and the
investment property disposals arose in Australia.
Financing cash flows
Financing cash flows include the drawdowns and repayments
associated with Goodman’s interest bearing liabilities. As
referred to previously, the Group redeemed USD denominated
notes of US$453.8 million during the year.
The other principal financing cash outflows were the
distributions paid to Securityholders of $551.4 million (2020:
$546.3 million) and loan funding provided to development joint
ventures of $135.0 million (2020: $ 9.8 million).
During FY21, the Group also issued new capital of $65.1
million (2020: $nil) to fund certain obligations under the LTIP.
Outlook
Goodman has developed significant expertise in its markets
with a deliberate strategy to target high barrier to entry
markets. This has positioned the Group well for future growth.
The business remains agile and consumer-centric, focused
on the changing consumption habits across the physical and
digital space and the evolving requirements of customers
around the world. The logistics and warehousing sector
continues to play a significant role globally in providing essential
infrastructure, enabling distribution of critical products.
Development activity and performance will continue to be
driven by significant customer led demand and the Group’s
ability to meet the opportunities that this presents. The growth
in demand from customers and investors, and the strength of
the Group’s locations have seen land values rise and as a result
many of Goodman’s existing stabilised properties have become
viable for redevelopment. The Board expects the increased
levels of development activity seen in FY21 will continue into
FY22 and the Group is well positioned to maintain an average
annual production rate consistent with the current levels, with
multi-storey developments a meaningful contributor.
The outlook for investment and management earnings
also remains strong, as the customer demand and supply
constraints in the Group’s markets provide support for both
rents and occupancy. Investment earnings will also benefit
from the completion of the ongoing developments and
management earnings will be further enhanced by the strong
positive near-term valuation outlook, which combined with
the sustained development volumes, are expected to provide
growth in AUM to more than $65 billion in FY22.
The Board sets financial performance targets annually
and reviews them regularly. The Board anticipates that the
challenges brought about by COVID-19 will continue over
the longer term, however the Group has significant expertise,
financial resources, a strategic real estate portfolio and
culture to adapt to challenging business conditions. Overall,
the Group expects to achieve operating EPS of 72.2 cents in
FY22, up 10% on FY21.
Forecasts are subject to there being no material adverse
change in market conditions or the occurrence of other
unforeseen events.
19
Goodman Group
Directors’ report
Risks
Goodman identifies strategic and operational risks for each of its regions as part of its strategy process. The key risks, an
assessment of their likelihood of occurrence and consequences and controls that are in place to mitigate the risks are reported
to the Board annually.
Goodman has established formal systems and processes to manage the risks at each stage of its decision making process.
This is facilitated by a Group Investment Committee comprising senior executives, chaired by the Group Chief Executive Officer,
which considers all major operational decisions and transactions. The Group Investment Committee meets on a weekly basis.
The Board has separate committees to review and assess key risks. The Risk and Compliance Committee reviews and monitors
a range of material risks in Goodman’s risk management systems including, among other risks, market risks, operational risks,
sustainability, regulation and compliance and information technology. The Audit Committee reviews and monitors financial risk
management and tax policies.
The key risks faced by Goodman and the controls that have been established to manage those risks are set out below:
Risk area
Mitigation
+ Low gearing, ample liquidity and appropriate hedging and
duration to absorb market shocks
+ Appropriate hedging quantities and duration in accordance with
Financial Risk Management Policy
+ Diversification and tenure of debt funding sources and maturities
+ Capital partnering transfers risks into Partnerships
+ Diversification of investment partners
+ Change in distribution pay-out ratio consistent with contribution
to increasing development workbook
+ Strong assets that can generate better rental outcomes
+ Long lease terms with prime customers
+ Key urban market strategy – urban infill locations support
re-usability of property
+ Adaptable and re-usable building design – ease to reconfigure
for another customer.
+ Global diversification of Goodman’s property portfolios
+ Focus on core property portfolios in key urban market locations
+ Focus on cost management
+ Prudent capital management with low gearing and significant
available liquidity to allow for potential market shocks
+ Co-investment with local capital partners.
+ Independent governance structures
+ Core values and attitudes, with an embedded compliance culture
focused on best practice
+ Dedicated Chief Risk Officer and Compliance Officer
+ Review of transactions by the Group Investment Committee.
+ Succession planning for senior executives
+ Competitive remuneration structures, including the LTIP
+ Performance management and review
+ Goodman values program
+ Learning, development and engagement programs.
Capital
management
(debt, equity
and cashflow)
Goodman could suffer an inability to deliver its
strategy, or an acute liquidity or solvency crisis,
financial loss or financial distress as a result of
a failure in the design or execution of its capital
management and financing strategy.
Economic and
geopolitical
environment
Governance,
regulation and
compliance
People and culture
Global economic conditions and government
policies present both risks and opportunities
in the property and financial markets and the
business of our customers, which can impact
the delivery of Goodman’s strategy and its
financial performance.
A continued increase in geopolitical tension
between countries could have potential
consequences on our people, operations
and capital partners.
Non-compliance with legislation, regulators, or
internal policies, or to understand and respond
to changes in the political and regulatory
environment (including taxation) could result in
legal action, financial consequences and damage
our standing and reputation with stakeholders.
Failure to recruit, develop, support and retain
staff with the right skills and experience may
result in significant underperformance or impact
the effectiveness of operations and decision
making, in turn impacting business performance.
Maintaining an organisational culture, in a
changing workplace environment, commensurate
with Goodman’s values.
20
Annual Report 2021
Risk area
Mitigation
Development
Development risks may arise from location,
site complexity, planning and permitting,
infrastructure, size, duration along with general
contractor capability.
Disruption, changes
in demand and
obsolescence
The longer-term risk that an inability to
understand and respond effectively to changes
in our competitive landscape and customer
value chain could result in business model
disruption and asset obsolescence, including the
perception of obsolescence in the short term.
Environmental
sustainability and
climate change
Failure to deliver on Goodman’s sustainability
leadership strategy and ambitions may lead to a
negative impact on Goodman’s reputation, ability
to raise capital and a disruption to operations and
stranded assets.
Asset and portfolio
Inability to execute asset planning and
management strategies, including leasing
risk exposures, can reduce returns from
Goodman’s portfolios.
Concentration
of counterparties
and markets
Over-exposure to specific areas, such as capital
partners, supply chain, customers and markets,
may limit growth and sustainability opportunities.
+ Review of development projects by the Group Investment Committee
+ Goodman defined design specifications, which cover
environmental, technological, and safety requirements,
protecting against short-term obsolescence
+ Redevelopment of older assets to intensify use
+ Pre-selecting and engaging general contractors that are
appropriately capitalised
+ Internal audit reviews
+ Insurance program, both Goodman and general contractor, including
project specific insurance
+ Ongoing monitoring and reporting of WIP and levels of speculative
development, with Board oversight including limits with respect to
speculative development and higher development risk provisions.
+ Key urban market strategy – urban infill locations support
re-usability of property
+ Adaptable and re-usable building design – ease to reconfigure for
another customer
+ Geographic diversification
+ Capital partnering transfers risks into Partnerships
+ Insurance program (both Goodman’s and key contractors),
including project specific insurance covering design and defects
+ Long lease terms with prime customers.
+ Corporate Responsibility and Sustainability policy
+ 2030 Sustainability Strategy including the assessment
of individual assets to improve resilience and implementation
of sustainability initiatives
+ Sustainability guidelines for development projects
+ Review and approval of acquisitions and development projects
by the Group Investment Committee and relevant Partnership
Investment Committee, including consideration of climate in due
diligence and specification.
+ Key urban market strategy – urban, infill locations where customer
demand is strongest
+ Diversification of customer base and lease expiries
+ Review of significant leasing transactions and development projects
by the Group Investment Committee
+ Capital expenditure program keeping pace with property lifecycle.
+ Diversification of customer base and lease expiries
+ Diversification of capital partners and Partnership expiries
+ Contractor pre-selection and tendering
+ Independence governance structure.
Information and
data security
Maintaining security (including cyber security)
of IT environment and data, ensuring continuity
of IT infrastructure and applications to support
sustainability and growth and prevent operational,
regulatory, financial and reputational impacts.
+ Reporting of risks and management activity
+ Proactive monitoring, review and testing of infrastructure
+ Disaster recovery and business continuity planning and testing
+ Benchmarked strategy for delivery of security IT infrastructure
Infectious
disease pandemic
There continues to be significant uncertainty
associated with the COVID-19 pandemic,
with mutations of the virus and significant
outbreaks continuing to occur globally. While
vaccine distribution is underway, there are
challenges with production and supply. Also the
success of the vaccine in enabling the world to
stabilise and transition to a normal footing is still
to be understood.
and systems
+ Training and awareness program and other assurance activities
for monitoring and improvement.
+ Protect and support our people
+ Global diversification of Goodman's property portfolios
+ Diversification of customer base
+ In-house property management team enabling flexibility to support
and respond to customers
+ Capital model, strong balance sheet with adequate liquidity available.
21
Goodman Group
Directors’ report
(continued)
QUALIFICATIONS, EXPERIENCE AND
SPECIAL RESPONSIBILITIES OF
DIRECTORS AND COMPANY SECRETARY
Board of Directors
Stephen Johns
Independent Chairman
Stephen is the Independent Chairman following the retirement
of Ian Ferrier at the 2020 AGM. He is a Non-executive Director
of Goodman Limited, Goodman Funds Management Limited
and Goodman Logistics (HK) Limited.
Appointed: 1 January 2017 (Goodman Limited and Goodman
Funds Management Limited); 19 November 2020 (Goodman
Logistics (HK) Limited).
Board Committees: Member of the Audit Committee
and Remuneration Committee and Chairman of the
Nomination Committee.
Skills, Experience and Expertise
Stephen retired as Chairman of Brambles Limited in
June 2020 after a period of 16 years on that Board and
was previously Chairman of Leighton Holdings Limited
and Spark Infrastructure Group.
Stephen is a former executive of Westfield Group where he
had a long executive career during which he held a number of
senior positions including that of Finance Director from 1985
to 2002. He was a non-executive director of Westfield Group
from 2003 to 2013.
He has a Bachelor of Economics degree from the University
of Sydney and is a Fellow of Chartered Accountants Australia
and New Zealand and a Fellow of the Australian Institute of
Company Directors.
Other Directorships and Offices
+ Director of the Garvan Institute of Medical Research.
Ian Ferrier, AM
Independent Chairman (retired)
Ian was the Independent Chairman (appointed on 28 July 2009
having been Acting Chairman from 28 November 2008). He was
also a Non-executive Director of Goodman Limited, Goodman
Funds Management Limited and Goodman Logistics (HK) Limited
(since 22 February 2012) until his retirement at the 2020 AGM.
Appointed: 1 September 2003 and retired on 19 November 2020.
Board Committees: Member of the Audit Committee and
Remuneration Committee until his retirement.
Skills, Experience and Expertise
Ian is a Fellow of Chartered Accountants Australia and
New Zealand and has in excess of 40 years of experience
in company corporate recovery and turnaround practice.
His experience is essentially concerned with understanding the
financial and other issues confronting company management,
analysing those issues and implementing policies and strategies
which lead to success. Ian has significant experience in property
and development, tourism, manufacturing, retail, hospitality and
hotels, infrastructure and aviation and service industries.
Other Directorships and Offices
+ Director of EnergyOne Limited (from January 2007).
Former directorships of other listed entities in the past
three years
+ Reckon Limited (August 2004 to July 2018).
Gregory Goodman
Group Chief Executive Officer
Gregory is the Managing Director of Goodman Limited and
Goodman Funds Management Limited and Group Chief
Executive Officer of Goodman. He is also an alternate director
of Goodman Logistics (HK) Limited.
Appointed: 7 August 1998 (Goodman Limited and 17 January
1995 Goodman Funds Management Limited); 18 January 2012
(Goodman Logistics (HK) Limited).
Former directorships of other listed entities in the past
three years
+ Brambles Limited (August 2004 to June 2020).
Board Committees: Nil.
Skills, Experience and Expertise
Gregory is responsible for Goodman’s overall operations and
the implementation of its strategic plan. He has over 30 years
of experience in the property industry with significant expertise
in the industrial property arena. Gregory was a founder of
Goodman, playing an integral role in establishing its specialist
global position in the property market through various corporate
transactions, including takeovers, mergers and acquisitions.
Other Directorships and Offices
+
+
Director of Goodman (NZ) Limited (the manager of the
New Zealand Exchange listed Goodman Property Trust)
Director and/or representative on other subsidiaries
and management companies of the Consolidated Entity
and Partnerships.
22
Annual Report 2021
Christopher Green
Independent Director
Chris is an Independent Non-executive Director of Goodman
Limited and Goodman Funds Management Limited.
Rebecca McGrath
Independent Director
Rebecca is an Independent Non-executive Director of
Goodman Limited and Goodman Funds Management Limited.
Appointed: 28 April 2019.
Appointment: 3 April 2012.
Board Committees: Member of the Audit Committee and
Nomination Committee.
Skills, Experience and Expertise
Chris spent 16 years at Macquarie Group and was the Global
Head of Macquarie Capital’s real estate business leading its
global expansion through to 2018. He has a Bachelor of Laws
(Honours) degree and a Bachelor of Commerce (Computer
Science and Accounting) degree from the University of Sydney.
Chris is also the Founder and Chief Executive Officer of
GreenPoint Partners, a New York headquartered firm investing
in real estate innovation, technology and private equity.
Other Directorships and Offices
+ Chief Executive Officer of GreenPoint Partners.
Mark Johnson
Independent Director
Mark is an Independent Non-executive Director of Goodman
Limited and Goodman Funds Management Limited.
Appointed: 1 June 2020.
Board Committees: Chairman of the Audit Committee and
member of the Risk and Compliance Committee.
Skills, Experience and Expertise
Mark is a trained accountant and spent 30 years at
PricewaterhouseCoopers (PwC) where he was CEO from 2008
to 2012 as well as holding positions as Asian Deputy-Chairman
and as a member of PwC’s global strategy council.
Mark also has extensive experience as a Director of charities,
educational bodies and mutual organisations and he is currently
a Director of the Smith Family, a Councillor at UNSW Sydney and
the Chairman of the Hospitals Contribution Fund of Australia.
Mark holds a Bachelor of Commerce (UNSW) degree and is
a Fellow, Chartered Accountants Australia and New Zealand,
Certified Practicing Accountant Australia and Fellow, Australian
Institute of Company Directors.
Other Directorships and Offices
+ Chairman of G8 Education Limited
+ Director of Corrs Chambers Westgarth
+ Director of Aurecon Group Pty Ltd.
Former directorships of other listed entities in the past
three years
+ Westfield Corporation Limited (May 2013 to June 2018)
+ Coca-Cola Amatil Limited (December 2016 to May 2021).
Board Committees: Chairman of the Risk and Compliance
Committee and Member of the Remuneration Committee and
the Nomination Committee.
Skills, Experience and Expertise
During her executive career at BP plc Rebecca held numerous
senior roles in finance, operations, corporate planning, project
management and marketing in Australasia, the UK, and
Europe. Her most recent executive experience was as Chief
Financial Officer of BP Australasia. Rebecca was formerly a
director of CSR Limited and Incitec Pivot Limited.
Rebecca holds a Bachelors Degree of Town Planning and
a Masters of Applied Science (Project Management) and
is a graduate of the Cambridge University Business and
Environment Programme. She is Victorian Council President of
the Australian Institute of Company Directors and a member of
the national board.
Other Directorships and Offices
+ Chairman of Oz Minerals Limited (Director since
November 2010)
+ Director of Macquarie Group Limited and Macquarie Bank
Limited (since January 2021)
+ Director of Investa Wholesale Funds Management Limited
+ Chairman of Scania Australia Pty Limited.
Former directorships of other listed entities in the past
three years
+
Incitec Pivot Limited (September 2011 to December 2020).
Danny Peeters
Executive Director, Corporate
Danny is an Executive Director of Goodman Limited,
Goodman Funds Management Limited and Goodman
Logistics (HK) Limited.
Appointed: 1 January 2013 (Goodman Limited and Goodman
Funds Management Limited); 1 February 2018 (Goodman
Logistics (HK) Limited).
Board Committees: Nil.
Skills, Experience and Expertise
Danny has oversight of Goodman’s European and Brazilian
operations and strategy. Danny has been with Goodman since
2006 and has 19 years of experience in the property and
logistics sectors.
During his career, Danny has built up extensive experience in the
design, implementation and outsourcing of pan-European supply
chain and real estate strategies for various multinationals.
23
Goodman Group
Directors’ report
(continued)
Danny was Chief Executive Officer of Eurinpro, a developer
of tailor-made logistic property solutions in Europe acquired
by Goodman in May 2006.
Other Directorships and Offices
Director and/or representative of Goodman’s subsidiaries and
Partnership entities in Europe and Brazil.
Phillip Pryke
Independent Director
Phillip is an Independent Non-executive Director of Goodman
Limited and Goodman Funds Management Limited.
Appointed: 13 October 2010.
Board Committees: Chairman of the Remuneration
Committee and Member of the Audit Committee.
Skills, Experience and Expertise
Phillip has wide experience in the fishing, energy, financial
services and health and technology industries and holds a
Bachelor of Economics Degree.
Phillip is currently a director of Carbine Aginvest Corporation
Limited. He was formerly the Deputy Chairman and Lead
Independent Director of New Zealand Exchange listed Contact
Energy Limited, a director of Tru-Test Corporation Limited and
North Ridge Partners Pty Limited, Vice President of EDS, Chief
Executive of Nextgen Networks, Chief Executive Officer of
Lucent Technologies Australia Pty Limited and New Zealand
Health Funding Authority and a Member of the Treaty of
Waitangi Fisheries Commission.
Other Directorships and Offices
Director of Goodman (NZ) Limited, the manager of the
New Zealand Exchange listed Goodman Property Trust,
Director of Carbine Aginvest Corporation Limited.
Anthony Rozic
Deputy Chief Executive Officer and
Chief Executive Officer North America
Anthony is an Executive Director of Goodman Limited and
Goodman Funds Management Limited.
Appointed: 1 January 2013.
Board Committees: Nil.
Skills, Experience and Expertise
Anthony is an Executive Director and Deputy Chief Executive
Officer (since August 2010). He was appointed Chief Executive
Officer, North America in September 2016, and in that role is
responsible for setting and managing the strategy, business
performance and corporate transactions for the Group’s North
American business.
Anthony joined Goodman in 2004 as Group Chief Financial
Officer and was appointed Group Chief Operating Officer in
February 2009 before taking on his current positions.
Anthony is a qualified Chartered Accountant and has
over 20 years’ experience in the property industry having
previously held a number of senior roles in the property funds
management industry and chartered accountancy profession.
Other Directorships and Offices
Director and/or representative of Goodman’s subsidiaries
and Partnership entities in North America.
Penny Winn
Independent Director
Penny is an Independent Non-executive Director of
Goodman Limited and Goodman Funds Management Limited.
Appointed: 1 February 2018.
Board Committees: Member of the Remuneration Committee
and Risk and Compliance Committee.
Skills, Experience and Expertise
Penny has over 30 years of experience in retail, supply chain
and digital strategy in senior management roles in Australia
and overseas, including as Director Group Retail Services with
Woolworths Limited (2011 to 2015) where she was responsible
for leading the Logistics and Information Technology divisions,
Online Retailing and the Customer Engagement teams across
the organisation. She has previously served as a director of
a Woolworths business, Greengrocer.com, a Myer business,
sass & bide, and Quantium Group.
Penny is a graduate of the Australian Institute of Company
Directors and holds a Bachelor of Commerce from the
Australian National University and a Master of Business
Administration from the University of Technology, Sydney.
Other Directorships and Offices
+
+
Director of CSR Limited (since November 2015)
Director of Ampol Limited (since November 2015).
Former directorships of other listed entities in the past
three years
+
Port Waratah Coal Services Limited (June 2015 to
December 2019)
+
Coca-Cola Amatil Limited (December 2019 to May 2021).
Company Secretary
Carl Bicego
Group Head of Legal and Company Secretary
Appointed: 24 October 2006.
Skills, Experience and Expertise
Carl is the Group Head of Legal and Company Secretary of the
Company. He was admitted as a solicitor in 1996 and joined
Goodman from law firm Allens in 2006. Carl holds a Master of
Laws and Bachelor of Economics/Bachelor of Laws (Hons).
24
Annual Report 2021
Directors’ meetings (GL and GFML)
The number of Directors’ meetings held (including meetings of committees of Directors) and the number of meetings attended
by each of the Directors during the financial year were:
Board meetings
Audit Committee
meetings
Remuneration
Committee meetings5
Risk and Compliance
Committee meetings
Nomination
Committee meetings6
Held1
Attended
Held1
Attended
Held1
Attended
Held1
Attended
Held1
Attended
Directors
Stephen Johns2
Ian Ferrier3
Gregory Goodman
Christopher Green
Mark Johnson4
Rebecca McGrath
Danny Peeters
Phillip Pryke
Anthony Rozic
Penny Winn
10
5
10
9
10
10
9
10
9
10
10
5
10
9
10
10
8
10
9
10
4
1
–
4
4
–
–
4
–
–
4
1
–
4
4
–
–
4
–
–
3
2
–
–
–
5
–
5
–
5
3
2
–
–
–
5
–
5
–
5
1
–
–
–
3
4
–
–
–
4
1
–
–
–
3
4
–
–
–
4
1
–
–
1
–
1
–
–
–
–
1. Reflects the number of meetings individuals were entitled to attend.
2.
Stephen Johns was appointed Chairman of Goodman on 19 November 2020. He concurrently resigned as Chairman of the Audit Committee while remaining
a member, commenced as a member of the Remuneration Committee and resigned as a member of the Risk and Compliance committee.
Ian Ferrier retired on 19 November 2020.
Mark Johnson was appointed Chairman of the Audit Committee on 19 November 2020 and commenced as a member of the Risk and Compliance Committee
on 19 November 2020.
3.
4.
5. The Remuneration Committee was formerly known as the Remuneration and Nomination Committee until it was reconstituted on 18 February 2021.
6. The Nomination Committee was established on 18 February 2021 and held the first meeting in March 2021.
1
–
–
1
–
1
–
–
–
–
25
Goodman Group
Directors’ report
Remuneration report – audited
Letter from the Chairman and
the Remuneration Committee Chair
REMUNERATION GOVERNANCE
The role of the Board and Remuneration Committee
Key activities of the Remuneration Committee for FY21
Key Management Personnel (KMP)
REMUNERATION STRATEGY
Key remuneration principles
Objectives of the remuneration strategy
Remuneration mix and alignment across the Group
EXECUTIVE REMUNERATION
FRAMEWORK
Remuneration components for executive KMP –
continued enhancements
Setting awards for the Group Chief Executive Officer
(CEO) and executive KMP
Considerations for award quantum
Valuation of performance rights (Economic Value)
1.
1.1
1.2
1.3
2.
2.1
2.2
2.3
3.
3.1
3.2
3.3
3.4
3.5 When is remuneration earned and received?
3.6
Non-financial measures
3.6.1
Types of non-financial measures
3.6.2
3.6.3
Integration of non-financial measures into
short-term incentives (STI)
Integration of non-financial measures into
long-term incentives (LTI)
3.7
3.8
Short-term incentive
Long-term incentive
3.8.1 FY22 LTI awards (five and ten year plans)
3.8.2 FY21 LTI awards
3.8.3 FY20 LTI awards
3.8.4 LTI awards prior to FY20
3.8.5
3.8.6
Operating EPS – long-term cash flow alignment
with vesting outcomes
Operating EPS hurdles for proposed ten year plan
awards to the Group CEO, executive KMP and other
senior executives
26
4.
4.1
4.2
4.3
4.4
GROUP PERFORMANCE AND OUTCOMES
Group FY21 highlights
Financial measures
Total returns comparison
Remuneration outcomes for FY21
4.4.1 STI outcomes
4.4.2 ESG assessment
4.4.3 LTI outcomes
4.4.3.1 Operating EPS hurdle (75% weighting)
4.4.3.2 Relative total securityholder return hurdle
(25% weighting)
4.4.4 Group CEO achievements
4.4.5 Other executive KMP achievements
4.5
5.
5.1
LTI grants to be made in September 2021
in relation to FY21 performance
NON-EXECUTIVE
DIRECTOR REMUNERATION
Key elements of the Non-Executive Director
remuneration policy
5.2
Board and committee annual fees
6.
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
STATUTORY DISCLOSURES
KMP remuneration (statutory analysis)
Movements in performance rights held
by executive KMP
Analysis of performance rights held by executive KMP
Securities issued on exercise of performance rights
Unissued securities under performance rights
Non-Executive Directors’ remuneration
(statutory analysis)
Movements in Goodman securities held
Transactions with Directors, executives
and their related entities
Annual Report 2021
Dear Securityholders,
Sustained performance
On behalf of the Board, we are pleased to present the 2021
remuneration report, outlining Goodman’s remuneration
strategy and principles.
The financial year 2021 (FY21) has been marked by the
ongoing impact of the COVID-19 pandemic and the
associated challenges for Goodman’s business, our people,
customers, investors and the communities in which we
operate and live.
During this time and amid physical changes to the working
environment, Goodman’s culture and long-term focus on
building leadership capability and resilience in our assets, has
allowed us to continue to respond and adapt. Our business
plays an important role in providing essential infrastructure as
well as aspiring to make a tangible difference to the communities
in which we operate, and Goodman has reacted to the crisis
through increasing support to affected groups. We appreciate
the exceptional effort that has been made by our people.
Managing the welfare of employees has been a critical
consideration in achieving the Group’s financial and operational
targets. Goodman has moved to a fully flexible operating
environment with all our people globally set up with access to
mobile connectivity, to mitigate the impact of the pandemic
on personal situations. We believe over time this will lead
to improved diversity in the workforce. Managers within the
Group, in particular the senior executives, have demonstrated
significant levels of leadership, compassion and commitment in
their efforts to achieve the Group’s commercial objectives.
Goodman is a leading internationally diversified real estate
fund manager in the logistics real estate sector. The attraction
and retention of talent is essential for the long-term success of
the business. This is increasingly challenging as opportunistic
competitors seek to recruit Goodman’s high-performing
teams, exacerbated by significantly increased demand for
logistics real estate in our markets.
Our longstanding and consistent approach to remuneration
has served us well and has been a key driver of our
sustained success as an international business. Goodman’s
remuneration framework is essential to attracting and retaining
high quality professionals with local expertise, who develop
businesses and foster relationships globally and drive
Goodman’s long-term success. This approach aligns the
interests of employees and Securityholders and is integral to
the exceptional results delivered for Securityholders over a
sustained period.
Over more than a decade, the Group has established strong
and resilient leadership teams, culture, financial resources and
a strategic real estate portfolio, to enhance the sustainability of
earnings through difficult market conditions. This has allowed
us to adapt to the new operating environment with limited
disruption and continue to position for long-term growth. The
Board is proud that Goodman has performed strongly through
this period and our long-term vision, which includes a strong
focus on cash flow, liquidity, and risk management, has been
executed consistently and diligently.
Total securityholder return (TSR) for the Group versus
comparable indices is detailed below, indicating sustained
material outperformance over many years:
Total securityholder
returns
1 year
%
3 years
%
5 years
%
10 years
%
Goodman1
S&P/ASX 20
S&P/ASX 100
S&P/ASX 200 A-REIT
MSCI World REITs2
44.7
32.7
29.2
33.3
39.0
133.4
236.9
41.7
37.5
25.3
52.1
86.5
81.9
33.1
99.6
742.1
181.3
185.5
204.9
175.2
Source: Bloomberg/Nasdaq.
1. Goodman TSR does not assume reinvestment of distributions.
2 MSCI World REITs index returns measured in USD.
Goodman has demonstrated great resilience against a
challenging backdrop. Our strong financial results and returns
to Securityholders in FY21 reflect the global diversity of our
businesses and our ability to support our customers and adapt
to a rapidly changing external environment. Highlights include:
+ Statutory profit of $2.3 billion for Goodman and $6.7 billion
across the combined Group and Partnerships
+ Operating profit of $1.2 billion (+15%) for Goodman
+ Goodman operating EPS growth of 14% materially
exceeded initial guidance to the market of 9%
+ Significant growth in the end value of development work in
progress up 63% during FY21 to $10.6 billion at 30 June
2021, positioning the business well into FY22 and making
Goodman the largest listed specialist developer of logistics
assets globally
+ Total assets under management increased 12% to $57.9 billion
+ Substantial revaluation growth of $5.8 billion across the
Group and Partnerships.
27
Goodman Group
Directors’ report
Remuneration report – audited (continued)
FY21 results represented a competitive rate of growth in
earnings whilst maintaining appropriate levels of risk relative
to other large listed equity alternatives. The results delivered
in the year also represented significant outperformance
relative to operational targets and this translated into superior
returns for Securityholders while positioning the business for
future sustainable growth. Despite the market uncertainty, our
measured approach over many years has allowed Goodman
to retain, and also exceed, previous operating EPS guidance
for FY21 and to position the business for a competitive rate of
operating EPS growth for FY22.
We have continued to reflect the importance placed on
achieving our sustainability and environmental objectives,
incorporating key targets into the operations and long-
term business strategies of the Group. These objectives
are not only cultural, but our people will be measured on
achievements against them over the long term.
Continued improvement and alignment of the LTIP
We believe that our fundamental principle of aligning all our
people and Securityholders meaningfully through equity is
unusual in the Australian market and has been a significant
factor contributing to the resilience of our business. This
should help deliver the Group’s and Securityholders’ desired
outcomes despite the uncertain outlook for global markets.
Goodman’s business has evolved significantly over the
past 12 years since the introduction of the current LTIP. The
Group’s increased focus on urban infill markets has led to
significantly longer development horizons and time frames for
realisation of value through the regeneration and change of
use of these assets. In the Board’s view, the long-term nature
of the structural trends impacting our sector and Goodman’s
approach to real estate investment in relation to this,
necessitates refinements to the current LTIP. Consequently,
the Board has made changes to the LTIP awards that will be
made in FY22. For the Group CEO, executive KMP and senior
executives this includes:
+ Extending the testing period to four years
(from three years)
+ Significantly increasing the vesting period to ten years
(from five years)
+
Increasing the difficulty of the testing and vesting
thresholds for both operating EPS and relative TSR
+ Adding environmental and sustainability hurdles to the
vesting conditions.
28
The Board believes increasing the testing period and
significantly lengthening the vesting period for the key
leadership group in the organisation, will further influence
decision making to deliver operating results which are both
superior and sustainable over the long term. It also provides
sufficient time scale to implement our ESG initiatives and
achieve our targets in a manner which creates even greater
alignment with the outcomes for Securityholders.
The Board’s belief in a pay for performance culture is reflected
in the challenging hurdles set for FY22 remuneration awards,
which if achieved at the top end of the range, should provide
Securityholders with top decile performance and over 50%
growth in operating profit over the four years. The Board is
always mindful of the focus on overall remuneration levels and
spends considerable time each year determining remuneration
outcomes for the Group CEO and other Key Management
Personnel. We recognise the range of expectations and have
made decisions that we believe take into consideration the
perspectives of all stakeholders.
We continue to engage in an open and meaningful dialogue
with Securityholders and other stakeholders to enhance
understanding of our policy and its contribution to Goodman’s
performance as well as giving us the opportunity to get an
update on Securityholder perspectives and local and global
market practices. We look forward to receiving your views and
support at our 2021 Annual General Meeting.
Yours sincerely,
Stephen Johns
Chairman
Phillip Pryke
Chairman, Remuneration Committee
Annual Report 2021
1. REMUNERATION GOVERNANCE
1.2 Key Activities of the Remuneration Committee for FY21
1.1 The role of the Board and Remuneration Committee
The Board considers remuneration with a minimum five year
view. It takes into consideration the impact that decisions
made over the last three to five years have had on current
performance and how it expects the business to perform over
the next five years and beyond. It is not solely an exercise in
reviewing a single year.
The Board believes the success of Goodman is primarily due
to its people and their ability to execute a global strategy that
requires agility, strong collaboration and an inclusive culture,
all of which are key elements supported by the LTIP.
The Board:
+ Encourages management to take a long-term strategic
rather than opportunistic approach to property investment
+
+
Integrates the operational, financial, environmental, and
human strategy to create long-term sustainable returns
Focuses on the consistency of cash generation, through
the Group’s operating profit, as the most tangible means of
measuring long-term value creation for Securityholders.
When determining the remuneration levels and outcomes
for FY21, the Remuneration Committee has considered
the specifics of individual performance, in the context of
the ongoing challenges of the COVID-19 environment and
collectively in the context of the Group’s continued strong
performance. Given the nature of the Group’s global operations,
the Remuneration Committee has paid particular attention to
the global marketplace and the competitors in our sector.
Refinements to the LTIP this year aim to reinforce Goodman’s
long-term decision making in line with the evolution of
the business and operational strategy, aligning this with
outcomes for Securityholders as well as providing competitive
remuneration to attract and retain high quality people.
The Remuneration and Nomination Committee was
reconstituted as the Remuneration Committee on 18
February 2021 and a separate Nomination Committee was
established. The establishment of a separate Nomination
Committee is in line with the ASX Corporate Governance
Council’s Principles and Recommendations and provides a
separate focus on the Board composition and skills, succession
planning for Directors and senior executives (refer to Goodman’s
Corporate Governance statement for further information).
Members of the Remuneration Committee for FY21 were:
Member
Role
Phillip Pryke
Independent Director and Chairman of
the Remuneration Committee
Stephen Johns
Independent Director and Chairman of
Goodman Group (appointed 19 November 2020)
Rebecca McGrath Independent Director
Penny Winn
Independent Director
Ian Ferrier
Former Independent Director and Chairman of
Goodman Group (retired 19 November 2020)
The Remuneration Committee has continued to make
significant enhancements to the structure of remuneration.
The Committee has:
+ Enhanced the LTI awards through the introduction of a ten
year plan for the Group CEO, executive KMP and other
senior executives (as detailed in Section 3). This plan,
which will apply for the intended grant of performance
rights to be made in September 2021 in respect of FY21
performance, will extend the testing period to four years
and the vesting period to ten years, thereby increasing
the period of alignment between executive remuneration
and Securityholder returns, will include more challenging
hurdles and incorporate additional environmental and
sustainability targets to the testing conditions for all other
eligible employees
+ Agreed with the Group CEO (as in prior years) that
he would not participate in the STI award and all his
performance-based remuneration in relation to his FY21
performance will be in the form of LTI
+ Added a requirement for executive KMP to hold securities
in the Group, to a minimum value of 100% of fixed
remuneration (requirement to be met by 1 October 2021).
Changes are also proposed to Non-Executive Director fees to
bring them in line with market levels and to the Non-Executive
Director annual fee cap, to facilitate the increased fees,
manage Board succession and overlaps, and accommodate
the potential appointment of additional Directors.
29
Goodman Group
Directors’ report
Remuneration report – audited (continued)
1.3 Key Management Personnel (KMP)
Member
Executive KMP
Role
Gregory Goodman
Group Chief Executive Officer
Danny Peeters
Anthony Rozic
Nick Vrondas
Nick Kurtis
Executive Director Corporate
Deputy CEO and CEO North America
Group Chief Financial Officer
Group Head of Equity
Michael O’Sullivan
Group Chief Risk Officer
Non-Executive KMP
Stephen Johns
Chris Green
Mark Johnson
Phillip Pryke
Rebecca McGrath
Penny Winn
David Collins
Chairman and Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
GLHK Non-Executive Director
Tenure at Goodman
26 years
15 years 1 month
17 years 1 month
15 years 2 months
21 years 8 months
19 years 10 months
Tenure on Goodman Board
4 years 6 months
2 years 2 months
1 year 1 month
10 years 9 months
9 years 3 months
3 years 5 months
3 years 5 months
2. REMUNERATION STRATEGY
Goodman is a globally diversified real estate fund manager, the largest developer of industrial and logistics buildings in the
world and one of the largest listed industrial property managers. The Group’s people are largely based outside Australia, and
Goodman’s remuneration structure reflects the requirements of the highly competitive labour markets we are competing in
globally, not just in Australia, and the objective of aligning multiple regional businesses and operational segments with Group
strategy and performance outcomes. A significant proportion of the value of the Group, reflected in the $27 billion premium
between Goodman’s security price of $21.17 and Goodman’s net tangible assets per security of $6.68, is attributable to the
value created across the global platform. Given the active nature of the Group’s operations, the Board believes that this is
almost entirely due to Goodman’s people, the decisions they make and their ability to execute that has positioned the Group to
grow cash flow from operations sustainably.
The retention of talent is therefore critical for the long-term success of the Group and is increasingly challenging as opportunistic
competitors seek to recruit Goodman’s high-performing teams in each of Goodman’s markets. The Group’s remuneration policy
is crucial to its ability to have the appropriate human resources to deliver on the strategy, create the right culture and drive
performance for the benefit of all stakeholders.
Goodman’s remuneration structure, in particular the focus on equity-based reward, has been a key component of the success
of Goodman as an international organisation. The Board believes aligning all people at Goodman with Securityholders through
the Group’s remuneration policy has added significant value to the Group. It has been a fundamental differentiator in generating
and rewarding long-term performance and retaining quality people in a highly competitive global environment. It is particularly
important considering the challenges COVID-19 has created, as it binds all employees together as owners of the business and is
a powerful incentive and driver of operational resilience.
30
Annual Report 2021
2.1
Key remuneration principles
+ Goodman’s approach to development considers the
Refining remuneration in line with Group strategy,
structural changes and our ESG aspirations
Given the cyclical nature of real estate, incentive structures
within real estate businesses are highly outcome driven
(particularly by private equity real estate managers where most
institutional assets reside). Goodman’s capital and resource
allocations shift over time, requiring rewards to be measured
over longer periods. The Group’s remuneration framework is
therefore focused on influencing long-term decision making
and collaboration across business units and international
operations to derive sustainable outcomes.
There are several key principles of remuneration at Goodman:
+ Focus on LTI as the predominant source of pay for
performance across the Group. All employees are eligible to
receive LTI grants as a material component of remuneration
and are tested using challenging hurdles without encouraging
inappropriate risk (see section 3.8.6), enhancing alignment
of rewards across the Group with Securityholders
+ Aligning the deliverable outcomes of all employees
globally, with Goodman’s aspirations of long-term cash
flow growth, resilience, and sustainability. This is practically
achieved through the focus on operating profit (which is
closely aligned with cash profits) as the primary testing
measure for LTI awards (see section 3.8.5)
lifecycle of the asset even for new developments which
allow further intensification or change of use at a later
time. This sometimes comes at the expense of short-term
performance; however, this approach is consistent with
the Group’s strategic objectives and provides future value
realisation potential, over significant time periods
+
Increased focus on ESG and integration of these aspirations
into the Group’s operational activities similarly requires
significant time periods (often beyond five years) for
implementation. Goodman’s approach to community,
environmental sustainability and wellbeing are all long-term
aspirations aligned with the financial sustainability objectives.
In the Board’s view, the long-term nature of the structural
trends impacting our sector and Goodman’s approach to real
estate investment in relation to this, necessitates refinements
to the LTIP for future awards.
Consequently, the Board has made changes to the LTI awards
that will be made in FY22. For the Group CEO, executive KMP
and senior executives this includes:
+ Extending the testing period to four years (from three years)
+ Significantly increasing the vesting period to ten years
(from five years)
+
Increasing the difficulty of the testing and vesting
thresholds for both operating EPS and Relative TSR
+ Collaboration to achieve Group-wide targets across
+ Adding environmental and sustainability hurdles to the
regions and business units
vesting conditions.
+ A culture of ownership, inclusion and alignment, where all
Goodman’s people experience investment returns aligned
with Securityholders.
Goodman’s business has evolved significantly over the past
12 years since the introduction of the LTIP. The Group’s
increased focus on urban infill markets has led to significantly
longer development horizons, realisation of urban regeneration
and change of use of existing assets. In summary:
+ Site acquisition and value add to existing stabilised sites,
typically require five to ten year (and sometimes longer)
time frames to achieve highest and best use and urban
regeneration outcomes
The Board believes increasing the LTIP testing period and
the significant lengthening of the vesting period for the senior
executives in the organisation, will further influence decision
making and more closely align with the time periods required
to deliver superior operational results on a sustainable basis.
It also provides sufficient time scale to implement key ESG
initiatives and achieve the Group’s targets, particularly in relation
to environmental and sustainability objectives, in a manner that
creates alignment with the outcomes for Securityholders.
The existing LTIP is already inclusive across the organisation
and spans over five years. It will remain in place for all eligible
employees who do not participate in the new ten year plan
and will be enhanced to include hurdles aligned with the ten
year plan.
31
Goodman Group
Directors’ report
Remuneration report – audited (continued)
2.2 Objectives and remuneration strategy
Attract
Reward
Long-term alignment of our people and Securityholders
Remuneration structure
Performance conditions
Alignment with strategy and long-term performance
Fixed remuneration
Low fixed costs, with the
focus on “at risk” equity
STI remuneration is an
at-risk award for
outperformance
over the past 12 months.
However the Group CEO
forgoes STI in favour of LTI.
Similarly, other executive
KMP only received
between 0% to 22%
of total remuneration
in STI.
Scope and complexity of
the role, individual absolute
and relative comparison
in the relevant market and
comparator group.
Assessment includes
four key components:
+ Meeting Goodman
behavioural expectations
per the Code of Conduct
+ Achieving operating
EPS target
+ Individual financial and
operational assessment
+ Assessment against
environmental and
sustainability objectives.
n
o
i
t
a
r
e
n
u
m
e
r
k
s
i
r
-
t
A
LTI at-risk remuneration
rewards long-term
sustained performance.
New awards will be
granted in FY22 in relation
to FY21 performance
achievements and
assessment of potential
future contributions.
Ten year plan awards
to Group CEO, executive
KMP and senior executives
tested over four years and
vesting in equal tranches
annually from the end of
year four to the end of
year ten
Five year plan awards
to remaining employees
tested over three years and
vesting in equal tranches
annually from the end of
year 3 to the end of year 5.
Operating EPS hurdle range
(75%) reflecting underlying
cash flow from operations
Relative TSR against the
S&P/ASX 100 (25%) – this
aligns with a significant portion
of investors’ benchmarks
relevant to their holdings and
provides closest alignment
with their performance
Environmental and sustainability
targets (set by the Board) over
the LTIP testing period with
penalty to vesting outcomes
of up to 20% of rights satisfying
the operating EPS hurdle for
material underperformance
against targets.
Real estate investment management and development are cyclical,
so fixed employee costs are kept low. Most KMP fixed remuneration
has not grown in several years.
STI is an at-risk component, rewarding financial and non-financial
performance against objectives of the individual and the Group.
Awards have varied from 0% to 100% of the maximum over time and
have declined over the past five years to 66% in FY21, in favour of LTI.
Base salaries for the executive KMP roles are set low versus peers and
this is carried through in lower STI outcomes for relevant KMP.
The performance of individuals is assessed through a performance
appraisal process based on contribution to strategic, financial, operational
and ESG objectives, while also reflecting behavioural expectations.
Financial performance is the primary measure in determining the maximum
level of STI for the individual; however, this can be penalised if behavioural
standards or ESG targets are not met or breached (up to 100% of STI
for certain measures). These factors together encourage not only the
operating EPS targets being met but also that the method in which they
are met matches appropriate risk and governance settings. This structure
is simple and transparent and aligns management with the operating
EPS growth and ESG expectations of Securityholders.
The weighting to LTI is believed to be the most effective way of rewarding
sustained performance and retaining talent whilst maintaining alignment
with Securityholders’ interests.
Hurdles are set to be competitive and challenging without encouraging
inordinate risk (see sections 3.8.5 and 3.8.6) relative to external and
internal reference points.
The relative TSR and operating EPS hurdles interact as TSR impacts the
value of all performance rights. Given the significant skew in remuneration
to performance rights, the impact of the TSR hurdle is greater than its
25% weighting in that TSR provides an effective check against increasing
risk or unsustainable practices within the Group. The price to earnings
multiple attributable to securities will reflect the risk in achieving operating
EPS targets, which impacts the likelihood of vesting and the ultimate value
upon vesting.
The total number of performance rights outstanding under the LTIP
equates to 3.7% of the Group’s issued securities. The maximum
number of performance rights under the LTIP is limited to 5% of the
Group’s issued securities.
Encourages a collaborative approach and broader distribution of
remuneration across the entire workforce when the Group is performing.
32
Annual Report 2021
2.3 Remuneration mix and alignment across the Group
FY21 vested remuneration outcome
The Board believes that the alignment between pay and
long-term performance is evidenced by the significant
proportion of the total remuneration that is at risk for
the Group CEO, the other executive KMP and the whole
organisation. In respect of the Group CEO, all of his ‘at risk’
remuneration is in the form of LTI.
This point is demonstrated in the charts below that consider
the vested remuneration received during FY21. Vested
remuneration represents the value that is received during
the year. It includes fixed base pay, STI and the value of
performance rights that vested during the year (from prior
grants) using the closing Goodman security price on the day
of vesting.
The ‘at risk’ remuneration (FY21 STI and LTI performance
rights that vested on 1 September 2020) forms a significant
proportion of total vested remuneration for all employees, but
especially for the Group CEO and the other executive KMP.
The Board believes that this demonstrates the alignment
of the remuneration outcomes for the Group CEO with the
outcomes for Securityholders, who have experienced very
strong performance in recent years. Had the Securityholder
returns been lower, the level of ‘at risk’ remuneration would
have been lower and fixed remuneration would have made up
a greater proportion of the total vested remuneration in FY21
for all employees, but especially for the Group CEO and the
other executive KMP.
Group CEO FY21 remuneration
3.8%
96.2%
SQUARE-FULL STI and LTI SQUARE-FULL Fixed remuneration
Executive KMP (excluding Group CEO) FY21 remuneration
6.3%
93.7%
SQUARE-FULL STI and LTI SQUARE-FULL Fixed remuneration
All employees (excluding executive KMP) FY21 remuneration
26.4%
73.6%
SQUARE-FULL STI and LTI SQUARE-FULL Fixed remuneration
33
Goodman Group
Directors’ report
Remuneration report – audited (continued)
3. EXECUTIVE REMUNERATION FRAMEWORK
3.1 Remuneration components for executive KMP – continued enhancements
LTI enhancements for the FY22 awards for Group CEO, executive KMP and other senior executives
Five year plan (current)
Change
Ten year plan (FY22 onwards) Comment/rationale
Testing criteria
EPS 75%
TSR 25%
No
No
EPS 75%
TSR 25%
Testing period
Three years
Yes
Four years
Vesting period
Yes
Five years for full vesting –
if hurdles are met then
vesting occurs in equal
tranches (33% per annum)
at the end of each financial
year from years three to
year five
Ten years for full vesting –
if hurdles are met then
vesting occurs in equal
tranches (14% per annum)
at the end of each financial
year from years four to
year ten
Consistent business strategy focused on
long-term cash flow growth as value driver
reflected through operating EPS growth
TSR impacts the value of all performance
rights, which is the primary form of
remuneration. Therefore, the impact of the
25% weighting to TSR is understated in relation
to the overall alignment with Securityholders
Improves the existing system by:
+ Increasing the period of alignment
with operational results
+ Places more of the employee’s
remuneration at risk and for a longer period
Improves the existing plan by:
+ Significant extension of alignment
through longer vesting period
+ Encourages long-term thinking
and behaviour
+ Longer hold period allows additional
time for clawback for fraud/malus
EPS performance
testing
Threshold
Five year plan (current)
Change
Ten year plan (FY22 onwards) Comment/rationale
6% compound annual
growth rate (CAGR)
in operating EPS
No
6% CAGR in operating EPS
25% of performance rights will satisfy the
hurdle at the Threshold level and 100% will
satisfy the hurdle at the Upper level, with a
sliding scale of vesting for outcomes between
this range. operating EPS hurdles are net of
the dilution from vesting prior period tranches
Vesting at threshold
25%
No
25%
Upper level
9% CAGR in operating EPS Yes
10% CAGR in operating EPS
Increased Upper level required
Vesting at upper level 100%
No
100%
34
Annual Report 2021
TSR performance
hurdle
Five year plan (current)
Change
Ten year plan (FY22 onwards) Comment/rationale
Testing criteria
TSR against ASX 100
No
TSR against ASX 100
Testing thresholds
Yes
0% at 50th percentile
50% at 51st percentile
Straight line vesting
percentage to 75th
percentile where 100% vests
0% at 50th percentile
25% at 51st percentile
Straight line vesting
percentage to 90th
percentile where 100% vests
Peer group for relative TSR is to remain
the S&P/ASX 100, which correlates
with most investor benchmarks relevant
to Securityholders
To increase the level of outperformance
required to achieve vesting in line with
significant Securityholder outperformance
Environmental and
sustainability hurdles Five year plan (current)
Change
Ten year Plan (FY22 onwards) Comment/rationale
Environmental
and sustainability
performance
No formal targets
Yes
Targets set by the Board are
tested annually and at the end
of year four.
Penalty applies to the number
of performance rights that have
satisfied the operating EPS
hurdle with 20% maximum
reduction in the event of
material underperformance
against targets
Given environmental and sustainability
initiatives are integrated into the operations
of the business, the penalty applies to the
number of performance rights that have
satisfied the operating EPS hurdle with 20%
maximum reduction in the event of material
underperformance against targets
The Board also notes that:
+ There are no changes to fixed remuneration levels for executive KMP in FY22
+
As in previous years the Group CEO will not participate in the STI award or any other form of variable cash remuneration
(comparatively, the ASX 100 average fixed pay plus STI is approximately 50% of total remuneration)
+ 87% of the Group CEO’s remuneration for his FY21 performance will be taken in the form of performance rights.
Under the new ten year plan and with the above remuneration structure:
+ The Group CEO would not receive any performance-based reward in respect of his performance for FY21 if the Group does
not meet its minimum performance hurdles under the LTIP over the next four years (measured at 30 June 2025)
+
The ultimate value of the award will be subject to Goodman’s security price performance and will only be fully realised over
the ten years to the 2032 financial year.
35
Goodman Group
Directors’ report
Remuneration report – audited (continued)
The chart below illustrates the components of KMP remuneration in relation to FY21 performance using:
+ Current fixed base pay
+ STI award (where applicable)
+ LTI award value using 100% of the intended grant to be made in September 2021 based on the economic value of the grants
of $6.10 per right, as detailed in section 3.4.
Fixed remuneration (%) STI (%) LTI (%)
Gregory Goodman
Danny Peeters
Anthony Rozic
Nick Kurtis
Michael O’Sullivan
Nick Vrondas
19
22
13
16
14
12
11
12
11
12
87
65
64
88
78
76
At risk
Note: This analysis is different to both the statutory presentation of remuneration and the vested remuneration, which are referred to elsewhere in the remuneration report.
3.2 Setting awards for the Group Chief Executive Officer (CEO) and executive KMP
When assessing the Group CEO’s and other executive KMP remuneration for FY21, the Board has given consideration to:
+ The structure of the awarded remuneration
+ Goodman’s relative performance amongst global peers and operational targets for FY21
+ Goodman’s consistent track record over the past ten years that has also positioned the business for the future
+ Global market conditions for human capital in the sector.
The Board is firstly focused on creating a remuneration structure that supports the Group’s strategy and is aligned with
outcomes for Securityholders and then on determining an appropriate quantum of remuneration under that structure.
On this basis, the Board has considered the outcomes for Securityholders, based on the testing criteria under the ten year plan
and the ‘pay for performance’ alignment with all Goodman employees (all permanent employees, approximately 930 people, are
eligible). As demonstrated below, before any performance awards are realised under the ten year plan, significant Securityholder
value is required to be created (all other things equal, that equates to $12 billion in market capitalisation growth, consistent with
>31% TSR over the period, based on the assumptions set out in the table below). If full vesting occurs, based on all other things
remaining equal, $22 billion of Securityholder value will have been created and this would result in approximately 50% TSR (based
on the assumptions below) and the employee’s share of this would be approximately 3%. Returns are net to Securityholders as
operating EPS calculations driving the growth in value account for the full dilution of the plan over the testing period.
36
Annual Report 2021
Estimated Securityholder value over the four year testing period under the ten year plan
<5.99% CAGR
over four years
6.0% CAGR
over four years
10.0% (or greater)
CAGR over four years
Plan
Economic outcomes
Cumulative operating EPS growth
Percentage of performance rights vesting1
Cumulative operating profit growth (including LTIP dilution)2
Year 4 operating profit to meet operating EPS hurdle
<26.2%
0.0%
<31.0%
<$1.6bn
26.2%
25.0%
31.1%
$1.6bn
Market capitalisation (MCAP) at end of year 43
<$51.7bn
$51.7bn
Net value created for Securityholders (growth in MCAP)3
<$12.3bn
$12.4bn
Assumed security price3
Employee share of Securityholder value created4
n/a
0.0%
$26.73
1.4%
46.4%
100.0%
51.8%
$1.9bn
$60.0bn
$20.5bn
$30.99
3.4%
Notes:
1. Assumes that the proportion of rights that vest under the operating EPS hurdle also applies to the rights that vest under the relative TSR hurdle.
2.
Based on 30 June 2021 security price, assuming the market Price/Earnings (P/E) multiple applied to operating EPS remains unchanged over time and is inclusive of
an allowance for increases in the securities on issue because of securities vesting under the LTIP. Excludes distributions and dividend payments that may be made
during the period.
3. Assumes constant P/E multiple at the end of year 4 and the relevant CAGR in operating EPS growth.
4.
Values the number of vested securities at the assumed security price which is calculated using the 30 June 2021 value and growing it at the same rate as the
operating EPS growth.
The maximum employee share of the value created will occur if the awards fully vest through reaching the cumulative 10%
CAGR in operating EPS after four years and the relative TSR performance is at the 90th percentile. This represents only 3.4%
of the $20.6 billion value potentially created for Securityholders or the 46.4% potential security price growth (all other things
being equal). If growth exceeds 10% per annum and the security price grows beyond the assumption above, the employees will
receive greater rewards in absolute terms, but their share diminishes relative to Securityholders.
Based on the reduction in economic value (as detailed in section 4) of performance rights issued under the ten year plan,
additional performance rights will be awarded to maintain the same economic value compared with what would otherwise have
been awarded under the five year plan. However, under the proposed grants, the increase in units issued, if 100% vesting for
both the relative TSR and operating EPS rights are achieved, would only result in approximately 0.2% additional operating
EPS dilution to Securityholders, which is spread over a further five years. The Board believes that the benefits of alignment and
securing senior executives over a significantly longer period of time, as a result of the ten year plan, outweighs this relatively
small dilution to Securityholders which only occurs should the hurdles be met.
For these reasons, the Board has concluded that the structure of the Goodman LTIP is aligned with the business strategy and
Securityholder returns.
37
Goodman Group
Directors’ report
Remuneration report – audited (continued)
3.3 Considerations for award quantum
3.4 Valuation of performance rights (Economic Value)
Given the variability in the components of remuneration
structures in the market, Goodman’s comparator group
analysis of value and quantum of awards must be considered
in the context of the degree of risk associated with the
structures and the vesting periods.
The Board has set the hurdles in respect of the intended LTI
award for FY22 to achieve a significant degree of alignment
with Securityholder outcomes and to provide substantial
challenges (and risk of achievement) for the executive
KMP. This is reflected in the ten year plan for the Group
CEO, executive KMP and other senior executives (with
four year testing and ten year vesting). The alignment and
challenges are also reflected in the five year plan, which
will be maintained for remaining employees (with three year
testing and five year vesting). In comparison, ASX 300 listed
companies’ long-term incentives average approximately three
years and generally are only for a few senior executives. In
addition, performance rights awarded under the LTIP do not
have any voting rights or rights to dividends until vested, even
after passing testing hurdles.
While the face value (represented by the current security
price multiplied by the number of performance rights granted)
provides an indication of potential value of the grant at a
point in time, it does not consider absolute or subjective
criteria in achieving the awards nor the skew to remuneration
that is at risk. The face value measure does not allow for
direct comparison when assessing the different risk profiles
associated with the vesting hurdles and substantially longer
vesting periods. Having regard to these factors, the Board
considers it both appropriate and necessary to consider the
economic value of awards and consequently performance
rights under both the five year and, even more importantly, to
assessing the ten year plan.
The Board has determined its LTI awards for KMP on the basis that
the hurdles, testing and vesting requirements under the ten year
plan are significantly more onerous relative to the LTI awarded in
the prior year under the five year plan. The awards under the ten
year plan require higher returns over a longer period and include
additional environmental and sustainability hurdles (see section
3.8.6 on proposed FY21 LTIP operating EPS grant targets).
The economic value of performance rights in particular, and
remuneration structures in general, have taken into account:
+
+
The composition of remuneration, taking into consideration
the proportion of cash versus conditional equity
An appropriate discount to allow for the lower probability of
vesting given the increase to a four year testing period and
the more challenging hurdles/thresholds set by the Board
+ A further discount for time value of money differential given
the vesting of the rights occurs over ten years.
Valuation methodology
The Board engaged an international accounting firm and
two investment banks to assist it in the determination of the
economic value of the performance rights. A Black Scholes
approach was applied having regard, among other things, to:
+ The probability of achieving the TSR and EPS vesting
criteria, and the associated impact that this has on the
expected vesting outcome
+ Expectations with respect to the Group’s security price
(including growth and volatility) and distribution payments
+ The time value of money applied through a discount rate.
A number of different methods were considered to determine
the appropriate discount rate. The Board resolved that a
discount rate based on observable expected returns provided
the best estimate for the cost of equity of the Group over a
time period consistent with the LTIP. This can be calculated
based on the current earnings of the Group and its expected
growth rate over the foreseeable period. These factors can
be reliably measured based on available market information
and are most closely aligned with Securityholder return
expectations over the relevant period.
As a result, the Board has adopted a 12.5% discount rate.
Applying this discount rate and the other key inputs results in an
assessed economic value per right of $6.10 for the ten year plan.
Note that this economic value assessment does not include
any discount factor to take account of the additional
environmental and sustainability objectives, which if not met,
will reduce the amount of performance rights that vest.
Other relevant considerations
The Board and Remuneration Committee have considered the
entire enterprise of the Group and its Partnerships globally, when
assessing the executive’s roles and remuneration awards.
In this context, Goodman:
+
+
+
+
+
+
Is an international real estate fund manager
Reported $2.3 billion statutory profit, and a combined
statutory profit across the Group and Partnerships of
$6.7 billion in FY21
Delivered $5.8 billion in valuation growth across the Group
and Partnerships in FY21
Is the largest listed specialist developer of logistics real
estate in the world, with $10.6 billion of work in progress
Manages and creates value across of $57.9 billion of
assets globally
Manages capital allocation and funding across various
activity types, which is sourced from multiple sophisticated
markets and jurisdictions
+
Has grown to $39.1 billion market capitalisation at 30 June
2021 and is a member of the S&P/ASX 20 index
38
+
+
Generates 68% of operating earnings from management
and development activities which require more intensive
day to day activity than a passive investment portfolio
Provides its customers and partners with investment
management, asset management, development, financial,
transaction and capital management services in the listed
and private equity capital markets globally
+
Derives 71% of operating earnings from international markets
with approximately 70% of employees situated offshore.
The Group has limited direct comparable market peers in
Australia, having operating businesses in five continents and
14 countries, each with market driven remuneration outcomes.
The Group has 941 employees at 30 June 2021, the majority
of whom are offshore, and consequently Goodman competes
for labour in an international market, which the Board
considers when assessing the quantum of remuneration
awards. In FY21, the Board has set this by reference to:
+
+
A range of local and global comparators with operations
of similar scale and complexity and certain companies in
the ASX 20
Private equity (PE) firms. Noting that PE firms are
significant players in the logistics real estate sector with
considerable new capital with a desire to assemble teams
and invest in the sector. PE remuneration is particularly
relevant because (1) the nature of pay for performance
remuneration structures is highly equity based and
outcome-driven similar to Goodman’s remuneration
structure and (2) the period of testing and realisation
of remuneration is linked to investor outcomes over
significant periods up to ten years, again similar to
Goodman’s remuneration structure. The majority of the
Group’s assets are within PE (unlisted) market entities,
which in turn creates significant competition for high
quality people.
In the Board’s view, the competitive environment for logistics
assets and consequently teams with skills to develop and
manage the products and services over the long term, has
intensified significantly over the past 18 months. Goodman is
seen as a global leader in this space and the potential loss of key
employees and regional teams poses significant commercial risk.
The Board has assessed the FY21 awards in this context.
Under the Group CEO’s proposed FY22 LTI award, the Board
has again considered the range of outcomes that are possible
and the Securityholder returns that accompany them.
On the basis of the estimated economic values of the total
remuneration outlined (noting the proposed LTI awards with
longer testing period, longer vesting period and significantly
larger portion at risk) and considering the market capitalisation
and performance differentials of the groups below, it is
considered that an appropriate benchmark for the Group
CEO’s remuneration is around A$15 million. Despite this, the
Board has agreed a value of A$10.9 million in respect of his
performance in FY21.
Annual Report 2021
39
Goodman Group
Directors’ report
Remuneration report – audited (continued)
Annual CEO remuneration1
Peer group
comparator
Reason for comparison
Range
Average/
Individual Median % LTI
Goodman
Goodman CEO
n/a
$10.9m $10.9m
S&P/ASX 20
Goodman is number 14
in the S&P/ASX 20 index
$2m-$25m
$8m
$7m
91%
47%
Selected global
comparators
including ASX
companies with
global operations
71% of Goodman’s earnings are
outside Australia. The comparator
group provides a reference to local
companies with international operations
and similar global companies
Company A
Australia and North America, cyclical
Company B
Company C
Global, complex, similar scale,
no further LTI testing post grant
Predominantly North America,
global, Real estate, Grant tested
Company D
International, Medical
Company E
Global, Passive, Real Assets
$7m-
$42.5m
$22m
$20m
60%2
n/a
n/a
n/a
n/a
n/a
$20m
$25m
$42m
$17m
$7m
n/a
n/a
n/a
n/a
n/a
LTI
Term
years
1 year
TSR
3 years
TSR
5 years
TSR
10
44.3%
133%
236%
4
4
3
4, 73
5
4
3
33%
42%
87%
28%
67%
145%
68%
36%
111%
144%
42%
182%
31%
97%
180%
0%
3%
53%
34%
171%
47%
1. Reflects fixed base pay and the economic value of the intended award of performance rights.
2. Excluding one outlier LTI as a percentage of total remuneration would be 51%.
3. Company B’s primary form of remuneration is in Profit Share which is not LTI but is deferred over 7 years.
In conjunction with the appropriate quantum, the Board views the alignment of outcomes for the Group CEO (and executive
KMP) as a primary consideration in setting awards and ties to the thresholds and vesting conditions in order to create a system
in which competitive returns accrue to Securityholders in order for performance based pay to be triggered.
The Group CEO’s intended LTI grant for FY22 has been formulated based on:
+
+
The Board’s assessment of appropriate quantum of award in respect of his FY21 performance
The FY22 LTIP structure (considering that the potential vesting of performance rights under the ten year plan does not occur
fully until 1 September 2031)
+
The economic value assessment.
The below table illustrates the Group CEO’s potential economic remuneration outcomes over the four year testing period that
may result from the intended grant.
Economic outcomes
Cumulative operating EPS growth
Vesting %1
Cumulative operating profit growth (including LTIP dilution)2
<6% CAGR in
operating EPS
6% CAGR in
operating EPS
10% CAGR in
operating EPS
<26.2%
0.0%
<31.0%
26.2%
25.0%
31.1%
46.4%
100.0%
51.8%
Net value created for Securityholders (growth in market capitalisation)3
<$12.3bn
$12.4bn
$20.6bn
Group CEO outcomes
Base salary
Performance rights award receivable over FY26-FY32 at the assessed economic value1
Total remuneration receivable in respect of FY21 performance
Annual vesting (using assessed economic value) FY26-FY32
Group CEO share of Securityholder value created2,3
$1.4m
$0
$1.4m
$ –
0.0%
$1.4m
$2.4m
$3.8m
$0.3m
0.1%
$1.4m
$9.5m
$10.9m
$1.4
0.2%
1. Assumes that the proportion of the operating EPS hurdle met also applies to the relative TSR hurdle.
2.
Based on 30 June 2021 security price, assuming the market P/E multiple applied to operating EPS remains unchanged over time and is inclusive of an allowance for
increases in the securities on issue as a result of stock vesting under the LTIP. Excludes distributions and dividend payments that may be made during the period.
Values the number of vested securities at the assumed security price which is calculated using the 30 June 2021 value and growing it by the same rate as the
operating EPS growth.
3.
40
Annual Report 2021
3.5 When is remuneration earned and received?
The chart below illustrates the timing of receipt of the remuneration components for executive KMP. Performance goals under
the ten year plan must be achieved over a period of four years to qualify for performance-based pay. Vesting then occurs in
seven equal tranches from years four to ten. There is no certainty of vesting and the outcome is dependent on the movement
in the security price over the next ten years.
Fixed
remuneration
STI
100% of fixed
pay awarded
in cash
Performance
period (1 year),
50% awarded
in cash
50% of total STI
deferred for 1 year,
awarded in cash
n
o
i
t
a
r
e
n
u
m
e
r
k
s
i
r
t
A
75% of award based on an operating EPS hurdle
and subject to no material underperformance
against environmental and sustainability targets.
Performance measured at the end of year 4
25% of award based on a relative TSR hurdle.
Performance measured at the end of year 4
14% of LTI award (subject to service /
performance requirements) vests shortly
after the end of year 4
14% of LTI award (subject to service / performance
requirements) vests shortly after the end of year 5
LTI
Performance
period (1 year)
14% of LTI award (subject to service / performance requirements)
vests shortly after the end of year 6
14% of LTI award (subject to service / performance requirements)
vests shortly after the end of year 7
14% of LTI award (subject to service / performance requirements)
vests shortly after the end of year 8
14% of LTI award (subject to service / performance requirements)
vests shortly after the end of year 9
14% of LTI award (subject to service / performance requirements) vests shortly after the end of year 10
Current year
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
41
Goodman Group
Directors’ report
Remuneration report – audited (continued)
3.6 Non-financial measures
3.6.2 Integration of non-financial measures into STI
3.6.1 Types of non-financial measures
Goodman continues to increase accountability and transparency
across a range of non-financial measures which are important
to the Group culture, its stakeholders and the world more
broadly. These are integral components to the operations
of the organisation, the health and wellbeing of the Group’s
people and the communities in which Goodman operates.
These values and aspirations encompass a wide range of
areas including:
+
+
+
+
+
Environmental considerations for developments and
building operations
Energy procurement including renewable targets
Group emissions and embodied emissions
Health and wellbeing of Goodman’s people and communities
Good corporate and social governance including diversity
and inclusion in the workforce
+
Behaviour in line with Goodman’s Code of Conduct.
All of these aspirations are integrated into Goodman’s culture and
business operations and the Group’s financial results are achieved
while also implementing and performing to these standards.
The way employees conduct themselves is crucial to
the success of the Group. Goodman has consistent and
transparent practices in place for managing non-compliance
with policies and the approach to risk guides the way all
employees are expected to conduct themselves. Within the
Code of Conduct, there is a set of eight guiding principles that
encourage employees to uphold Goodman’s reputation and
behave appropriately in dealing with our customers and other
team members. The guiding principles are:
+
+
+
+
+
+
+
+
Act in a professional manner
Work as a team and respect others
Treat stakeholders fairly
Value honesty and integrity
Follow the law and our policies
Respect confidentiality and do not misuse information
Manage conflicts of interest
Strive to be a great team member.
Individual’s behaviour and adherence to the code of conduct,
governance, implementation of diversity principles and
social programs is assessed as a gate to STI and LTI awards.
Breaches can also result in forfeiture of LTI or potentially more
stern consequences depending on severity.
In respect of the FY21 STI awards and the intended LTI
awards that will be made in September 2021 (in respect of
FY21 performance), key environmental and sustainability
targets will also be assessed based on the individual’s areas
of influence and contributions as part of overall assessment.
STI Process
1st Hurdle
Conduct, Governance,
Social and Diversity
Impact
Gate
2nd Hurdle
Operating EPS
Gate
Financial, and operational
assessments (including
environmental objectives)
Individual assessment
0-100%
3.6.3 Integration of non-financial measures into LTI
The Board also believes that ownership through the
LTIP embeds a culture of inclusion and sense of place in
Goodman and that this has been strongly reflected in the
Group’s performance over many years and particularly
through COVID-19. While behaviour and adherence to the
Group’s Code of Conduct has always been a prerequisite
to entitlement to vested LTI, for future LTI awards, starting
with the intended awards in September 2021, the Board will
incorporate an additional hurdle for vesting, related to our
environmental and sustainability targets.
+
+
The Board will set annual targets which form a subset of
the Group’s long-term and publicly available environmental
and sustainability targets and measure performance
against these each year
Environmental and sustainability objectives and their
execution are integrated into the operations of the Group,
particularly for development projects. For this reason,
the additional penalty criteria will apply to the operating
EPS tested performance rights. This aligns operational
targets which are within the control of senior executives
and employees at all levels and therefore have the most
logical connection to operational performance
+
Targets set by Board will be tested annually and at the
end of year four
+ The penalty applies to the number of performance
rights that have satisfied the operating EPS hurdle
with 20% maximum reduction in the event of material
underperformance against targets
+ Targets will be reported each year in the remuneration report.
LTI Process – three and four year testing period
1st Hurdle
Conduct and
behaviour
Impact
Gate: 0 – 100%
2nd Hurdle Operating EPS
and relative TSR
0 – 100%
Group
assessment
Environmental
and sustainability
The penalty applies to the number
of performance rights that have
satisfied the operating EPS hurdle
with 20% maximum reduction in the
event of material underperformance
against targets
42
Annual Report 2021
3.7 Short-term incentive
STI is a component of remuneration that is at risk. It is specific to achievement of financial and non-financial objectives.
This structure is very transparent and aligns management with the operating EPS growth expectations of Securityholders.
Questions
Who is eligible to
participate in the STI?
What is the form
of the STI award?
What is the maximum
award participants
may earn?
How is the STI earned?
How is the individual
STI award determined?
Is there malus/clawback?
All full-time and part-time permanent employees.
The Group CEO agreed with the Board not to participate in the STI awards, to emphasise reward for long-term
decision making across the organisation.
Nick Kurtis (Group Head of Equities), Michael O’Sullivan (Group Chief Risk Officer) and Nick Vrondas
(Group Chief Financial Officer) have agreed with the Board to forgo varying portions of their STI awards in line
with FY20 in exchange for LTI, to emphasise reward for long-term decision making across the organisation.
Cash. For executive KMP, 50% of the STI award is paid on finalisation of Goodman’s full year result.
50% of the STI award is deferred and paid in cash after a period of 12 months and the deferred STI amount
is subject to forfeiture under malus provisions (see below).
STI awards are capped at 150% of fixed remuneration for executive KMP. Target STI for individuals is also
compared to market based remuneration data and their manager’s own assessment of what an appropriate
level of incentive compensation may be relative to the long-term value that person brings to the Group.
The Board sets budget targets for the business annually. These targets are set relative to the market conditions,
earnings visibility, financial structure and strategy and are believed to be challenging and appropriate.
STI for all staff is subject to: (1) meeting behavioural expectations under the Group Code of Conduct; and
(2) achieving operating EPS (based on the annual forecast for the relevant year) (3) financial and operational
assessment (4) assessment against environmental and sustainability targets.
STI rewards annual performance against objectives of the individual and the Group.
The Group objectives include multiple factors as set from time to time, dependent on the market and strategy
of the Group. Overall Group financial performance relative to targets is the primary assessment, overlaid with
required achievement against environmental and sustainability objectives and adherence to the Group’s core values.
The Remuneration Committee looks at conduct and specific judgements are made in relation to this.
The performance of individuals is assessed through a detailed and formal performance appraisal process based
on contribution to defined objectives, behavioural expectations, annual contribution to results as well as strategic
and other contributions where these results or benefits may be reflected in future years.
The executive KMP STI awards are subject to 50% deferral for 12 months from the date of publication of Goodman’s
financial statements. This deferral period provides protection from malus. The Board has discretion to forfeit deferred
amounts for material misstatement, fraud or adverse changes that would have affected the award where there is
executive responsibility.
Is STI deferred into equity? No. A much greater portion of remuneration for executive KMP is in the form of LTI (equity) than arguably any other
S&P/ASX 100 entity and hence they are already significantly more aligned with Securityholders’ outcomes than
executives at other listed entities. As a result, in the Board’s view, there is little further benefit in deferring STI into equity.
What happens to
STI upon termination?
For all executive KMP, the deferred portion of STI award is subject to immediate forfeiture in circumstances where
employees are dismissed for cause without notice (e.g. fraud or serious misconduct) or resign from the organisation.
The Board has discretion to pay deferred STI in exceptional circumstances, where employees leave the Group, with
good leaver status, due to certain personal circumstances or due to permanent disablement or death.
3.8 Long-term incentive
The LTIP is an equity plan where rewards are at risk of performance and time. It is open to all permanent employees to create
alignment with the interests of Securityholders over the long term.
+
+
+
No value is derived from LTI unless minimum performance hurdles of operating EPS and relative TSR are met or exceeded,
and performance rights have no entitlement to income or assets until they vest.
If performance achieves or exceeds long-term targets and performance rights vest, LTI represents the majority of
remuneration for executive KMP and becomes a material component of remuneration for all participating employees.
In FY22 a ten year plan will be introduced for the Group CEO, executive KMP and other senior executives. Key differences
to the previous five year plan are explained in section 3.1 and the key terms of both plans are set out below.
43
Goodman Group
Directors’ report
Remuneration report – audited (continued)
3.8.1 FY22 LTI awards (five and ten year plans)
Questions in relation to grants to be made in FY22
Who is eligible
to participate?
What is the form
of the award?
What is the maximum
LTI participants
may earn?
All full-time and part-time permanent employees are eligible to participate in either the five year or the ten year
plans. Executive KMP and senior executives participate in the ten year plan.
The LTIP awards performance rights linked to the underlying ASX listed securities. The performance rights do not
receive distributions or have any right to income net assets or voting until vesting.
When considering the overall size of LTI awards, the Board also considers the number of securities that could
vest and the associated impact on the operating EPS growth. The total five year and ten year performance rights
outstanding under the LTIP are capped at 5% of issued capital with vesting of approximately 1% per annum,
assuming all hurdles are met and all employees remain employed. The Board considers the performance of the
Group in comparison with the comparator group, the amount of overall operating profit, the competitive nature of
the global labour markets where Goodman operates and the value of the team in the local and global marketplace,
as appropriate.
How is the number
of rights determined?
The Board sets quantum based on a number of factors described in section 3. The number of rights is then
determined by dividing the LTI award amount by the economic value per right, as determined by the Board.
What are the
performance measures?
Behaviour in accordance with Goodman’s core values is an absolute requirement for the granting of performance
rights and a minimum hurdle for LTI awards to vest as continued employment is a pre-condition.
The Board believes that the commercial decisions Goodman makes in fulfilment of its overall financial objectives
are best reflected in two key indicators: operating EPS and TSR (relative to the S&P/ASX 100).
Operating EPS is a critical measure of long-term global performance of the operations (see section 3.8.5).
The hurdles are set to be competitive and challenging relative to external and internal historical and prospective
reference points (see section 3.8.6).
TSR provides an effective check against increasing risk practices within the Group i.e. the security price to
earnings multiple will reflect the perceived risk in the Group in achieving operating EPS targets.
Focus on LTI is an efficient way of rewarding sustained performance and retaining talent.
FY22 LTI awards, will incorporate environmental and sustainability targets, in addition to the operating EPS and
relative TSR hurdles. Targets set by the Board will be tested annually and at the end of the LTIP testing period.
A penalty applies to the number of performance rights that have satisfied the operating EPS hurdle, with 20%
maximum reduction if material underperformance against the environmental and sustainability targets occur.
What is the weighting?
75% operating EPS hurdle
25% relative TSR hurdle
What is the
performance period?
How do the
LTIP awards vest?
Ten year plan: both operating EPS and relative TSR performance are tested over four financial years starting
from 1 July in the year the grant was made. Operating EPS growth is assessed in the fourth year relative to the
year preceding the year of the grant. Environmental and sustainability targets are tested annually and at the
end of year four.
Five year plan: both operating EPS and relative TSR performance are tested over three financial years starting
from 1 July in the year the grant was made. Operating EPS growth is assessed in the third year relative to the
year preceding the year of the grant. Environmental and sustainability targets are tested annually and at the end
of year three.
Ten year plan: Subject to meeting performance hurdles, vesting occurs in equal tranches shortly after the end
of years 4-10, provided participants remain employed by the Group.
Five year plan: Subject to meeting performance hurdles, vesting occurs in equal tranches shortly after the end
of years 3-5, provided participants remain employed by the Group.
Is there malus/clawback?
Subject to immediate forfeiture in circumstances where employees are dismissed for cause without notice
(e.g. fraud or serious misconduct). LTI will also be forfeited where employees cease to be employed, unless in
Special Circumstances.
What happens to LTIP
awards upon termination?
Performance rights lapse upon the employee leaving Goodman unless in Special Circumstances (primarily
Death, TPD, Redundancy and Retirement (at retirement age) in which case they are not subject to the employment
requirement and vest subject to performance hurdles being met and the usual timetable. The Board may determine
acceleration in exceptional circumstances if considered appropriate.
What rights are attached
to the performance rights?
Executive KMP
equity holding
Performance rights have no Securityholder rights prior to vesting (e.g. distributions, voting, rights issue participation).
Executive KMP are required to hold 100% of the value of their fixed remuneration in Goodman securities, determined
at time of purchase. The requirement will apply from 1 October 2021. In addition, Goodman’s remuneration structure
includes significant emphasis on performance-based remuneration in equity and the overall exposure of KMP
to Goodman securities extends significantly beyond this requirement principally through participation in the LTIP.
44
Annual Report 2021
What are the vesting
conditions for FY22
ten year plan grants?
What are the vesting
conditions for FY22
five year plan grants?
Operating EPS tested (75% of grant)
The Board has set an operating EPS performance
hurdle of growing operating EPS from the FY21 result
of 65.6 cents to between 82.8 cents (Threshold level)
and 96.0 cents (Upper level) in FY25. Vesting of 25%
of the operating EPS portion occurs upon satisfying
testing conditions at the Threshold level with a sliding
scale up to 100% at the Upper level. The range is
equivalent to between 6% and 10% CAGR in operating
EPS or approximately 26% to 46% cumulatively over
the four year testing period.
In addition, a penalty may apply to the number of
performance rights that have satisfied the operating
EPS hurdle if environmental and sustainability targets
are not met. These are set by the Board annually with
20% maximum reduction in the number of rights
vesting under the operating EPS tranches in the event
of material underperformance against targets.
Operating EPS tested (75% of grant)
The Board has set an operating EPS performance
hurdle of growing operating EPS from the FY21 result
of 65.6 cents to between 78.1 cents (Threshold level)
and 87.3 cents (Upper level) in FY24. Vesting of 25%
of the operating EPS portion occurs upon satisfying
testing conditions at the Threshold level with a sliding
scale up to 100% at the Upper level. The range is
equivalent to between 6% and 10% CAGR in operating
EPS or approximately 19% to 33% cumulatively over
the three year testing period.
In addition, a penalty may apply to the number of
performance rights that have satisfied the operating
EPS hurdle if Environmental and Sustainability targets
are not met. These are set by the Board annually
with 20% maximum reduction in the number of rights
vesting under the operating EPS tranches in the event
of material underperformance against targets.
Relative TSR tested (25% of grant)
TSR awards are subject to achievement of cumulative.
TSR relative to the S&P/ASX 100 over a four year period:
– 25% of awards vest for performance at the
51st percentile.
– Awards vest on a sliding scale between 25%
and 100% for performance between the 51st
and the 90th percentile.
– 100% of awards vest for performance at the
90th percentile or above.
Relative TSR tested (25% of grant)
TSR awards are subject to achievement of cumulative
TSR relative to the S&P/ASX 100 over a three year period:
– 25% of awards vest for performance at the
51st percentile.
– Awards vest on a sliding scale between 25%
and 100% for performance between the 51st
and the 90th percentile.
– 100% of awards vest for performance at the
90th percentile or above.
Can the hurdles
be adjusted?
3.8.2 FY21 LTI awards
No (subject to Listing Rule adjustments).
No.
Questions specific to the grants made in FY21
What are the
vesting conditions
for FY21 grants?
Operating EPS tested (75% of grant)
The Board has set an operating EPS performance
hurdle of growing operating EPS from the FY20 result
of 57.5 cents to between 68.5 cents (Threshold level)
and 74.5 cents (Upper level) in FY23. Vesting of 25% of
the operating EPS portion occurs upon satisfying testing
conditions at the Threshold level with a sliding scale
up to 100% at the Upper level. The range is equivalent
to between 6% and 9% CAGR in operating EPS or
approximately 19% to 30% cumulatively over
the three year testing period.
Relative TSR tested (25% of grant)
TSR awards are subject to achievement of cumulative
TSR relative to the S&P/ASX 100 over a three year period:
– 50% of awards vest for performance at
the 51st percentile.
– Awards vest on a sliding scale between 50%
and 100% for performance between the 51st
and the 76th percentile.
– 100% of awards vest for performance at the
76th percentile or above.
45
Goodman Group
Directors’ report
Remuneration report – audited (continued)
3.8.3 FY20 LTI awards
Questions specific to the grants made in FY20
What are the
vesting conditions
for FY20 grants?
Operating EPS tested (75% of grant)
The Board set an operating EPS performance hurdle
of growing operating EPS from the FY19 result of 51.6
cents to between 61.4 cents (Threshold level) and
66.8 cents (Upper level) in FY22. Vesting of 25% of the
operating EPS portion occurs upon satisfying testing
conditions at the Threshold level with a sliding scale
up to 100% at the Upper level. The range is equivalent
to between 6% and 9% CAGR in operating EPS or
approximately 19% to 30% cumulatively over the three
year testing period.
Relative TSR tested (25% of grant)
TSR awards are subject to achievement of cumulative
TSR relative to the S&P/ASX 100 over a three year period:
– 50% of awards vest for performance at
the 51st percentile.
– Awards vest on a sliding scale between 50%
and 100% for performance between the 51st
and the 76th percentile.
– 100% of awards vest for performance at the
76th percentile or above.
3.8.4 LTI awards prior to FY20
Questions specific to outstanding historic grants made between FY17 and FY19
What are the vesting
conditions for prior grants
(FY17 to FY19) currently
outstanding?
Operating EPS tested (75% of grant)
Operating EPS awards are subject to achievement
of a cumulative operating EPS hurdle, which is the
combination of three years’ individual operating EPS
hurdles. This ensures that the appropriate balance
between short and long-term challenges is incorporated.
With the vast majority of remuneration through LTI, the
focus remains on sustainable performance.
Targets are disclosed to the market each year and are
equal to the forecast operating EPS. For FY21, this is
62.7 cents as it relates to the FY19 award. Performance
conditions for the FY17 and FY18 awards which have
outstanding tranches, have already been tested. See
section 4.4.3. for details of testing results for FY19 awards.
Relative TSR tested (25% of grant)
TSR awards are subject to achievement of cumulative
TSR relative to the S&P/ASX 100 over a three year period:
– 50% of awards vest for performance at the
51st percentile.
– Awards vest on a sliding scale between 50%
and 100% for performance between the 51st
and the 76th percentile.
– 100% of awards vest for performance at the 76th
percentile or above.
46
3.8.5 Operating EPS – long-term cash flow alignment
+
with vesting outcomes
The Group presents statutory profit in accordance with
Australian Accounting Standards, including all required
disclosures. The Board believes that managing the business,
on what is primarily a cash profit basis, is fundamental to
long-term resilience and is the strongest determinant of value
creation for Securityholders over time. That is the intent of
the Group’s operating profit definition and it is one of the
key measures used to drive the business strategy that is
communicated to Goodman’s employees to execute. This
is also why the Board has used operating EPS as one of the
principal targets in its awards of both STI and LTI.
Calculation of operating EPS
Operating EPS has been calculated and applied consistently
since being adopted in 2005.
+
+
Operating profit intentionally excludes non-cash measures.
Previously, the Group has excluded significant realised
gains (such as the urban renewal realisation gains) where
these were believed to be cyclical in nature and not
reflective of underlying long-term earnings.
As required under the accounting standards, the
share-based payments (SBP) expense in the Group’s
statutory income statement reflects the amortisation of
the aggregated fair value applicable to the outstanding
performance rights. Given the volatility inherent in the
accounting valuation of the performance rights, the SBP
expense is excluded from operating profit, like other
non-cash items (such as revaluations). Instead, the Board
believes the cost of the plan, which arises from the future
dilution through the issuance of securities under the LTIP,
is most appropriately reflected by including all vested and
tested performance rights in the denominator used for
determining operating EPS.
+
The operating EPS at each reporting date is calculated using
the weighted average number of securities, which includes:
– all securities that have already vested
– rights that have been tested and assessed as having
met the hurdles but have not yet vested.
The inclusion of these unvested performance rights in the
operating EPS calculation is a conservative treatment as:
+
+
The financial impact of the performance rights occurs
only when securities are issued through the dilution to net
assets at the time of issuance and the dilution to future
operating EPS
Not all performance rights necessarily vest. This can
only occur if testing criteria are met and by extension,
the Group’s performance has achieved or exceeded
performance criteria, which doesn’t necessarily align with
SBP expense
Annual Report 2021
Following successful testing at years three or four,
performance rights still have no entitlement to income
(distributions) or net assets nor do they have any of the other
usual Securityholder rights until they vest, which may be up
to six years later (under the ten year plan).
Therefore, in the Board’s view realised cash profit as represented
by diluted operating EPS is the most reliable measure of value
creation for Securityholders and continues to be an appropriate
means by which to assess employee performance. It is also
consistent with the predominant method of valuation of
Goodman by the market.
Notwithstanding this, the Board notes that using the Group’s
statutory profit instead of operating profit as the basis for the
earnings hurdle under the LTIP would have had no impact on
the future vesting of those performance rights that were tested
at June 2021. It would, however, have materially increased the
volatility of the Group’s earnings.
Use of Phantoms
In certain jurisdictions, it is impractical to issue performance
rights which vest into Goodman securities. In these instances,
‘Phantom’ performance rights are issued, with the same
economic outcome, but with the intent to be cash settled on
vesting. From time to time, the Group may issue new securities
into the market to fund the settlement of those rights. This results
in the same outcome to Securityholders as if the Phantoms
had been settled in Goodman securities because it results in
the situation where the dilutionary impact to operating EPS is
consistent with the equity settled performance rights. As in recent
years, the Board’s current intention is to issue securities to fund
the cash requirements to settle the Phantoms. This results in the
effective funding of the LTIP having no cash impact for the Group
and as a consequence the share based payments expense
remains effectively a non-cash item in the context of the definition
of operating profit.
3.8.6 Operating EPS hurdles for proposed ten year plan
awards to the Group CEO, executive KMP and other
senior executives
The operating EPS target range under the ten year plan is for
the purpose of remuneration only, specifically the testing criteria
for vesting of performance rights. The range does not constitute
earnings guidance for the Group.
The Board has set an operating EPS performance hurdle for
FY22 of growing operating EPS from the FY21 result of 65.6
cents to between 82.8 cents (Threshold level) and 96.0 cents
(Upper level) in FY25. At the Threshold level, 25% satisfy the
hurdle with a sliding scale up to 100% satisfying the hurdle at
the Upper level. This range is equivalent to between 6% and
10% CAGR in operating EPS or approximately 26% to 46%
cumulative over the four year testing period. Notwithstanding
Goodman achieved operating EPS growth in excess of 10% in
FY20 and FY21 performance at the upper level is considered
significantly challenging over four years and in the Board’s view is
likely to be achieved only after exceptional performance.
47
Goodman Group
Directors’ report
Remuneration report – audited (continued)
The range has been set with particular reference to:
+
+
+
+
A significant proportion of the Group’s revenue over the next four years, particularly in regard to development activities, is at
risk and uncontracted
The range of potential real estate opportunities for the Group globally, given the Group’s risk parameters and concentrated locations
The long-run historical performance of the Group, noting that previous history is not a reflection of future earnings
The global economic environment, noting the uncertainty around ongoing impacts of COVID-19 on global economies, that the
current rate of inflation in Australia and the major markets in which Goodman operates globally is around 0% to 1.5% per annum
and the current ten year rate of interest on government securities in Australia and most major markets is <1.5% per annum.
The Board believes the higher FY22 hurdle is significantly more challenging given the current economic environment particularly given
the extension of the testing period (and independently verified through the lower economic value of performance rights under the
new plan). The hurdles are set for the entire period of the grant and hence performance must be achieved regardless of changes to
business conditions globally. Management and other employees carry the risk associated with external factors negatively impacting
operating earnings and in the Board’s view this risk has increased given the ongoing and unknown impacts of COVID-19.
The hurdles are set with the desire to achieve a sustainable long-term growth rate that is competitive with the market on a risk
adjusted basis, reflecting the low financial leverage of Goodman and other risk settings particularly given the continued impact of the
current global pandemic and economic environment. In the Board’s view, increasing hurdles to unsustainable levels would encourage
riskier behaviour, inconsistent with an acceptable risk tolerance and framework and expectations of Securityholders. This could
potentially lead to lower quality earnings and adversely affect the intent of the LTIP and ultimately Securityholder returns.
Ten year plan
operating EPS
(cents)
CAGR in
operating EPS
FY22 – FY25
Ten year plan
Cumulative growth
in operating EPS
FY22 to FY25
82.8%
96.0%
5.4%
6%
10%
23.3%
26%
46%
Australia
(% per annum)
United States
(% per annum)
Europe
(% per annum)
1.35
1.10
1.40
5.4
-0.29
0.39
LTI hurdle period (estimated)
S&P/ASX 100
Threshold level
Upper level
Sources: Nasdaq, FactSet.
Economic indicators
Ten year bond rate
Inflation rate
Source: Bloomberg
48
Annual Report 2021
4. GROUP PERFORMANCE AND OUTCOMES
Despite the significant headwinds caused by the global pandemic, the Group has recorded another year of material
outperformance, both relative to its external targets and its internal operational targets. Goodman’s security price performance
in FY21 continued to be significantly ahead of its peer groups, following ten years of outperformance.
The Group’s remuneration strategy focused on long-term outcomes is the key driver of this sustained performance.
4.1 Group FY21 highlights
Financial
Statutory profit of $2,311.9 million for Goodman and $6,722.6 million for the combined Group and Partnerships
Operating profit of $1,219.4 million (up 15.0% on FY20)
Operating EPS of 65.6 cents (up 14.1% on FY20)
Maintained distribution of 30.0 cents per security
Net tangible assets (NTA) per security increased 14.4% to $6.68 per security
Operational property investment, management and development
High occupancy maintained at 98% and like for like net property income growth of 3.2%
Total AUM of $57.9 billion (up 12.0% on FY20)
Significant outperformance by the 16 Partnerships achieving average returns of 17.7%
Development WIP (end value) increased to $10.6 billion and with 96% commitment levels on completions
and 13 year weighted average lease terms
People and culture
Social investment of approximately $6 million by the Goodman Foundation and through efforts of employees worldwide
Female senior roles up from 23% in FY20 to 30% in FY21. Goodman continues to work towards 40% females in senior
roles by 2030 and 50/50 representation overall by 2030
Expansion of Goodman’s supply chain ethics towards a global supplier code of conduct increasing the focus
on human rights and potential modern slavery
Strong focus to employees on reinforcing behaviours that are consistent with the Group’s values
Feedback from employees via surveys undertaken in FY21 indicates strong communication and employee engagement
Environmental
Goodman’s global operations achieved carbon neutrality and certified as a Carbon Neutral Organisation
Transitioned to 100% certified GreenPower secured for Goodman’s Australian operations from 1 July 2021, increasing
Goodman’s global renewable energy usage to over 60%
Approximately 125MW of solar PV now installed or committed across the global portfolio, an increase of 70MW in FY21
Commenced calculating the embodied emissions of all of Goodman’s logistics developments globally and established
a framework for integration into approval processes as we transition to carbon neutral developments
Capital management
Maintained significant available liquidity at $1.9 billion, including $0.9 billion in cash
Significant business growth while maintaining low gearing at 6.8%
Group and Partnerships completed debt refinancing transactions totalling $5.4 billion
49
Goodman Group
Directors’ report
Remuneration report – audited (continued)
Over the past decade, the Group has established teams with
significant specialist expertise, financial resources, and a
strategic real estate portfolio. It has deliberately positioned its
business to maximise cash flow resilience in varying market
cycles, primarily through:
+
+
+
Concentration of the portfolio on logistics real estate in
urban infill markets, where supply is limited, and demand is
driven by consumers
Deleveraging the Group’s balance sheet and retaining
significant liquidity
Partnering with long-term capital to share risk and return
over a significant globally diversified platform.
This has included specific actions over successive years, including:
+
+
+
Significant reduction in financial leverage (gearing) over the
last twelve years from 47.9% to 6.8% and maintained low
leverage in the past few years
Increased quality of the property portfolio through over
$27 billion of asset sales since 2013 concentrating
the portfolio in predominantly urban infill markets and
providing funding for the development of new buildings
Established an international platform with significant
depth of experience required to generate excess returns
in competitive high barrier to entry markets
+ Diversification of the Group’s sources of debt and tenor
+
+
Reduced operational risk through undertaking more
development activity in Partnerships, which has reduced
volatility of earnings while increasing return on assets for
the Group. The impact of increased development within the
Partnerships has increased their returns and the prospects
for Goodman to earn performance fees in the medium to
longer term
Significant sales of assets that were reconfigured for
higher and better residential use. For these transactions,
the substantial profit was not included in operating profit
despite being cash realised gains as they were believed
to be over and above the usual course of business
+
Maintained a conservative distribution pay-out ratio to
retain funding for growing development activity.
Many of these strategic initiatives rely on foregoing some
short-term returns to secure potentially larger long-term
sustainable returns.
The resilience of the Group through this period is largely due
to strategic long-term thinking, a highly talented team with
specialist skills, and incentivising those employees through
equity, linked to sustained operational performance over a
long period.
FY20
FY21
1,060.2
1,219.4
FY19
942.3
51.6
10.5
57.5
11.4
15.03
14.85
30.0
59.4
14.6
5.34
1.3
9.7
46.2
17.6
30.0
-0.4
13.5
5.84
1.0
7.5
51.6
16.5
65.6
14.1
21.17
30.0
43.3
23.4
6.68
1.7
6.8
57.9
26.8
4.2 Financial measures
Performance measures
Operating profit ($M)
Operating EPS (cents)
Operating EPS growth (%)
Security price as at 30 June ($)
Distributions per security (cents)
TSR (%)
3 year TSR growth ($B)1
NTA per security ($)
Growth in NTA ($B)
Gearing (%)
AUM ($B)
Market capitalisation premium to NTA ($B)
FY16
714.5
FY17
776.0
FY18
845.9
40.1
7.8
7.11
24.0
17.0
5.1
4.10
1.2
11.8
34.1
5.4
43.1
7.5
7.87
25.9
14.2
4.4
4.21
0.2
5.9
34.6
6.6
46.7
8.3
9.62
28.0
26.0
6.1
4.64
0.9
5.1
38.3
9.0
1.
TSR is the increase in market capitalisation plus dividend and distribution, attributable to the respective financial year.
50
Annual Report 2021
The key financial metrics which are aligned with the Group’s strategy, long-term performance and STI and LTI programs for all
employees are operating EPS and relative TSR. CAGR in operating EPS over the past five years has been exceptional at 10.3%,
which has exceeded the forecasts and therefore the hurdles. This has been achieved while at the same time reducing gearing,
and not utilising the short-term benefits of low interest rates to financially engineer performance.
Operating EPS growth and targets
%
C A G R 1 0 . 3 %
5 y e a r
10.5
8.3
7.5
6
6
6
14.1
9
11.4
7
Gearing
%
23.9
18.9
19.5
17.3
11.8
9.7
7.5
6.8
5.9
5.0
FY17
FY18
FY19
FY20
FY21
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
SQUARE-FULL EPS growth target SQUARE-FULL EPS growth achieved
4.3 Total returns comparison
Goodman is the only real estate group in the ASX 20 and the 14th largest ASX listed entity at 30 June 2021 with a market
capitalisation of over $39 billion. The chart below shows the Group has significantly outperformed the S&P/ASX 20, S&P/ASX
100 and S&P/ASX 200 AREIT indices over the past one, three and five years.
Securityholder return relative performance
300
250
200
150
100
50
June 2016
June 2017
June 2018
June 2019
June 2020
June 2021
SQUARE-FULL Goodman SQUARE-FULL S&P/ASX 20 SQUARE-FULL S&P/ASX 100 SQUARE-FULL S&P/ASX 200 A-REIT index
)
%
(
n
r
u
t
e
R
51
Goodman Group
Directors’ report
Remuneration report – audited (continued)
4.4 Remuneration outcomes for FY21
4.4.1 STI outcomes
The Board has again agreed with the Group CEO that he will not participate in the STI award. In line with continued focus on
sustained long-term performance, all performance based remuneration relating to the Group CEO’s FY21 performance will be
awarded in the form of performance rights.
Given the global nature of the Group’s operations the recommendations for each executive KMP are based on the Remuneration
Committee’s review of several sources of market information relating to the individual’s role, region and global comparisons and
specific incentive schemes that apply in competitor organisations.
Executive KMP STI outcomes (excluding the Group CEO), on average, are consistent with FY20 and down 27% over the past
two years, (averaging 66% of the maximum potential versus 64% in FY20). This reflects the Board’s decision to focus reward in
the form of LTI, particularly for the KMP whose roles have greater focus on overall Group strategy. The table below indicates the
maximum possible STI and the actual STI awarded for FY21.
It should be noted that based on the Group and individual performances in FY21, KMP were eligible for the maximum STI.
Test
Gate 1: Behaviour
Metrics
Code of Conduct: Pass/Fail
Result
Pass
Gate 2: Operating EPS – FY21
operating EPS versus target
Operating EPS growth:
Target 9% (62.7 cents per security)
14.1% operating EPS growth
(65.6 cents per security)
Financial and operational assessments
(including environmental objectives)
Individual assessment
Various (0-100%)
Year
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
STI
maximum
Actual STI
awarded
Cash
component
Deferred
component
Actual STI %
of maximum
$M
2.10
2.10
1.05
1.05
0.75
0.75
1.05
1.05
€M
0.85
0.85
US$M
1.05
1.05
$M
–
–
–
–
0.50
0.40
0.70
0.60
€M
0.70
0.70
US$M
1.05
1.05
$M
–
–
–
–
0.25
0.20
0.35
0.30
€M
0.35
0.35
US$M
0.525
0.525
$M
–
–
–
–
0.25
0.20
0.35
0.30
€M
0.35
0.35
US$M
0.525
0.525
–
–
–
–
67
53
67
57
82
82
100
100
Executive
Gregory Goodman
Nick Kurtis
Michael O’Sullivan
Nick Vrondas
Danny Peeters
Anthony Rozic
52
Annual Report 2021
4.4.2 ESG assessment
STI (and LTI) award grant assessments are undertaken with
reflection on behaviour, governance, social, environmental
and sustainability goals and targets. The Group has made
significant contributions and efforts in a wide range of areas,
with key highlights including:
+
+
+
+
+
+
+
Goodman’s global operations achieved carbon neutrality
and certified as a Carbon Neutral Organisation by
Climate Active
Approximately 125MW of solar PV installed and committed
on Goodman’s rooftops globally, including an additional
70MW in FY21
Transition to 100% certified GreenPower secured for
Goodman’s Australian operations from 1 July 2021,
increasing Goodman’s global renewable energy usage
to over 60%
Commenced calculating the embodied emissions of all of
Goodman’s logistics developments globally and established
a framework for integration into approval processes as the
Group transitions to carbon neutral developments
Biodiversity initiatives underway including the
establishment of urban forests across Goodman’s
European operations
Achieved Sector Leader in the 2020 Global Real Estate
Sustainability Benchmark (GRESB) for the Goodman
Japan Partnership in the East Asia Distribution Warehouse
peer group
Smart irrigation technology in approximately 43% of the
portfolio saving approximately 53% in water used on
irrigation, or equivalent to 30 Olympic swimming pools
+
+
+
+
+
+
Expansion of Goodman’s supply chain ethics towards a
global supplier code of conduct increasing the focus on
human rights and potential modern slavery
Goodman Group’s Task Force on Climate-related Financial
Disclosures (TCFD) statement completed and available on
the Goodman Group website
Cutting edge sustainability design initiatives in our
global development specifications including solar PV,
electric vehicle charging points, LED lighting and drought
tolerant landscaping
$10 million EV incentive program launched to staff
globally to assist in electric vehicle purchase over the
next five years
Contributed $6.3 million to community and philanthropic
causes including $0.4 million raised directly by staff
Results of the engagement surveys undertaken across
various regions were pleasing with an average of
approximately 85% positive responses. Key area to focus
on is social interaction, given the dislocation of operations
due to COVID-19.
Key areas of assessment for FY21 are detailed below. The form
of disclosure below (subject to relevant evolution and changes
over time as set by the Board) will be used as the basis for
future assessment of environmental and sustainability measures
which will be set and tested annually in conjunction with the
assessment over the testing period for performance rights.
Assessment area
Environment
Renewable Energy
Long-term target
Outcome
Pass/Fail
100% renewable energy use within
Goodman’s operations by 2025
Achieved 100% Renewable Energy use Australia in
FY21, and increased to approximately 60% globally
Solar PV Installation
400MW of solar PV installed or committed by 20251 Solar PV increased to 125MW in FY21
Carbon Neutral
Carbon neutral operations by 2025
Achieved Carbon Neutral operations during FY21, four
years ahead of target
TCFD
GRESB
Occupancy
Achieve TCFD by FY22
>4 star
>95%
1. Subject to Government regulation in each jurisdiction.
Achieved FY21
Achieved 4 star FY21
98%
53
Goodman Group
Directors’ report
Remuneration report – audited (continued)
Code of conduct, behaviour, social and governance requirements
Assessment area
Diversity
Long-term target
Outcome
Pass/Fail
Gender ratio in
the workforce
50% Gender ratio in the workforce by 2030
Currently at 44% female workforce
Women in senior roles
>40% in senior roles by 2030
Increase from 23% to 30% in FY21
Governance
Workplace safety
Safe working environment with demonstrable
risk controls, contractor management and
monitoring of key safety metrics
Unfortunately, four fatalities occurred on development projects
under the control of principal contractors during FY21. While
Goodman is not responsible for the day to day management
of works on these projects, it is active in monitoring and
working to introduce improved safety standards in all regions
Significant reputational
issues arising from
illegal conduct
Zero
Social
Zero
Social/charitable
donations
$50 million in social investment by
Goodman Foundation by 2030
$6.3 million was contributed to community
and philanthropic causes during FY21, taking
our total to $20 million in the past two years
4.4.3 LTI outcomes
Testing as at 30 June 2021 was completed for the grants of performance rights made to executive KMP in respect of executive
KMP performance in FY18 (called FY19 awards). These performance rights were tested over three years and vest in three equal
tranches shortly after the third, fourth and fifth anniversary of the grant. The FY19 awards had two hurdles: operating EPS and a
relative TSR, both measured over the three years ended 30 June 2021.
The mechanics of the testing are detailed in section 3.8.
4.4.3.1 Operating EPS hurdle (75% weighting)
The operating EPS is calculated by dividing operating profit by the weighted average number of securities on issue adjusted to include
all performance rights which have passed the testing criteria, even though they are not yet vested (issued) to account for potential EPS
dilution. Operating EPS growth for the three year period to 30 June 2021 was 40.5%, compared to a cumulative target of 27.4%.
FY19
FY20
FY21
Cumulative
Target
Actual
Outperformance
Outcome
50.0 cents
51.6 cents
56.3 cents
57.5 cents
62.7 cents
65.6 cents
1.6 cents
1.2 cents
2.9 cents
5.7 cents
Pass
Pass
Pass
100%
4.4.3.2 Relative TSR hurdle (25% weighting)
TSR provides an effective check against increasing risk practices within the Group, as the price to earnings multiple will reflect the
perceived risk in the Group. Relative TSR is measured against the S&P/ASX 100 peer group. Vesting applies on a sliding scale:
+ 0% vests up to and including the 50th percentile
+ Vesting of 50% starts at the 51st percentile on a sliding scale with 100% vesting at the 75th percentile.
Goodman posted a three year TSR of 128.9% to 30 June 2021, under the LTIP TSR calculation methodology. This ranked
Goodman in the 92nd percentile against the S&P/ASX 100 and consequently 100% of these performance rights vested.
FY18 LTIP grant – TSR hurdle1
128.9%
37.5%
92nd
100%
GMG TSR1
S&P/ASX 10 TSR1
Percentile
Outcome
1
Testing period for grant: 1 July 2018 to 30 June 2021, in accordance with the LTIP the TSR is based on the 10 day VWAP at beginning and end of testing period and
is therefore different from the three year TSR sourced from Bloomberg and presented elsewhere in this report.
As a result of satisfying 100% of the EPS hurdle and the relative TSR hurdle, a total of 16,012,338 equity settled performance rights will
vest in September 2021, September 2022 and September 2023. In addition, 3,875,750 cash settled performance rights will also vest.
The Group may elect to issue the equivalent number of new securities to satisfy those obligations in the future.
54
Annual Report 2021
4.4.4 Group CEO achievements
In determining the Group CEO’s remuneration, the Board acknowledged his strong leadership through the challenges of
COVID-19. It has also considered the following contributing factors and highlights:
Greg Goodman
Leadership
+ Developed and drove a consistent global business strategy across all markets to sustain the performance
of the Group despite prolonged and significant challenges presented by COVID-19. The Group has adapted
to these challenges and continues to outperform its own targets and the broader market performance,
retaining employees and increasing community support and charitable programs.
+ He has positioned the busines as a leader in its field, managing, motivating and incentivising key personnel
across the platform to perform in a highly competitive environment
+ Fostered a culture that focused on delivering quality across all aspects of the business: people, properties
and service
+ Lead global internal programs to promote a strong culture of inclusion, collaboration and conduct across
the organisation, underpinned by the long-held principles in the Group’s Code of Conduct, treating all
stakeholders with integrity, and accountability
+ Reinforced Goodman’s purpose aimed at understanding the drivers of change and the needs of customers
and all stakeholders to support their future success.
Financial and risk
+ He has fostered continuity of strategy over successive years leading to outperformance over benchmark
indices and comparator companies in FY21, and delivered strong and sustained TSR of 133.4% over three
years and 235.9% over five years
+ Delivered:
– Revaluation growth across the Group and Partnership of $5.8 billion
– Statutory profit of $2,311.9 million (up 54%), driven by growth in property values as a result of asset
selection over the past few years and operational activities such as development
– Operating profit of $1,219.4 million, up 15% on FY20
– Operating EPS of 65.6 cents, up 14% on FY20
– NTA increased 14% to $6.68 per security
+ Exceeded earnings guidance in FY21 after posting significant outperformance in FY20 through the COVID-19 period
+ Drove a clearly defined capital management strategy with financial leverage 6.8% and maintained a strong
Group balance sheet with $1.9 billion of liquidity
+ Integrated strong risk management approaches globally.
Environment
+ Instrumental in significantly increasing the focus on ESG initiatives and programs throughout the Group and
a culture which continually looks to improve Goodman’s impact on the world. In particular:
– Establishing a zero carbon emissions target for the Group by 2025 and achieving it in FY21
– Increasing the 2025 target for solar PV capacity installed on the rooftops of Goodman’s global portfolios
Social and culture
and installed almost 80MW in FY21
– Completing compliance with TCFD in FY21
+ Established a framework for measuring and assessing embodied carbon to transition to carbon
neutral developments
+ Implemented an EV incentive scheme for staff globally to encourage a shift towards lower emissions vehicles.
+ Led the shift for all employees to increase alignment with Securityholders through the LTIP as the preferred form
of remuneration by taking 100% of performance based remuneration in performance rights and working with the
Board to implement the new ten year plan.
+ Commenced new initiatives and Goodman Foundation commitments to enable it to meet its $50 million 2030
social impact target. The Group CEO led initiatives that:
– Contributed $6.3 million to community and philanthropic causes including $400,000 raised directly by staff.
Expansion of Goodman’s supply chain ethics towards a global supplier Code of Conduct increasing the
focus on human rights and potential modern slavery.
– Enabled the Goodman team globally to contribute 5,360 hours to volunteering and community events
through the year. The Goodman Foundation focuses on children and youth, community and its health,
and food rescue and the environment
– Through Goodman’s funding, food rescue partners have provided more than 197 million meals globally
and made significant commitment to domestic violence prevention.
The charts below demonstrate the performance of the Group and various key metrics relative to the Group CEO’s vested remuneration
outcomes in FY21 and prior years. They illustrate that the significant operating profit growth, security price growth and consequently
returns for Securityholders over the testing periods, correlate with increased Group CEO remuneration over time. Given the strong
increase in the market price of securities between the time of the grant and the time of vesting, the Group CEO (and all recipients of the
LTIP) has participated in the performance alongside Securityholders.
55
Goodman Group
Directors’ report
Remuneration report – audited (continued)
Importantly, the Group CEO’s vested remuneration as a proportion of TSR (in $ billion) and statutory profit has trended lower
over the past five years, indicating that the Securityholders have experienced a more than proportionate benefit from the
Group’s performance relative to the Group CEO.
CEO remuneration and growth in market cap
3 year rolling
h
t
w
o
r
g
p
a
c
t
e
k
r
a
M
25
20
15
10
5
0
Profit and vested remuneration
2.5
2.0
1.5
1.2
t
fi
o
r
P
1.0
0.7
0.5
0.0
V
e
s
t
e
d
r
e
m
u
n
e
r
a
t
i
o
n
40
35
30
25
20
15
10
5
0
1.7
1.5
1.2
1.1
1.1
0.8
0.8
0.8
0.9
2.3
40
35
30
25
20
15
10
5
0
V
e
s
t
e
d
r
e
m
u
n
e
r
a
t
i
o
n
FY16
FY17
FY18
FY19
FY20
FY21
FY16
FY17
FY18
FY19
FY20
FY21
SQUARE-FULL Remuneration at grant date ($M)
SQUARE-FULL Remuneration at vesting date ($M)
SQUARE-FULL TSR growth ($B)
SQUARE-FULL Statutory profit ($B)
SQUARE-FULL Operating profit ($B)
SQUARE-FULL Vested REM ($M)
The table below includes awarded remuneration at grant date and the vested remuneration over the past five years for the Group
CEO. The numbers in this table differ from the statutory disclosure in section 5 primarily due to the differences in the measurement
and timing of recognition in respect of performance rights granted under the LTIP and not the final vesting outcome. The below
figures show the base salary received by the Group CEO in the respective year plus the value of performance rights which vested
during that year at the closing price on the day the performance rights vested.
The table highlights:
+ No change in fixed remuneration over the period
+ The proportion of remuneration from fixed (cash) salary has continued to decline
+
Significant growth in the value of LTI from grant date to the vesting date due to the increase in security price
(on average an increase of 147% for grants vesting in FY21).
Base salary
STI
Value of LTI on grant date1
Value of LTI on vesting date
Total remuneration based on LTI value at grant date1
Total vested remuneration based on LTI value at vesting date
Increase in LTI value due to security price performance of the Group
FY16
$M
FY17
$M
1.4
–
3.1
5.2
4.5
6.6
2.1
1.4
–
3.8
7.0
5.2
8.4
3.2
Percentage growth in value of LTI during vesting period
66%
84%
FY18
$M
1.4
–
4.7
8.8
6.1
10.2
4.1
88%
FY19
$M
1.4
–
7.3
13.5
8.7
14.9
6.2
86%
FY20
$M
FY21
$M
1.4
–
11.6
25.4
13.0
26.8
13.8
1.4
–
14.4
35.6
15.8
37.0
21.2
119%
147%
1.
Value based on the security prices at the grant dates for the performance rights that vested in the financial year. This is so as to allow comparison of the security price
outperformance over the period between grant and vesting dates.
56
Annual Report 2021
The chart below illustrates the increase in the value of the Group CEO’s vested LTI in FY21 from the date of the original awards
in 2015, 2016 and 2017. These significant gains have arisen due to consistent earnings growth and security price outperformance
of the Group.
Group CEO FY21 vested performance rights
Value at grant date ($M) Value at vesting date ($M)
Performance rights
14.4
35.6
Gain due to increase in security price ($21.2M)
4.4.5 Other executive KMP achievements
In FY21, the Board considered the following highlights when assessing other KMP
Danny Peeters
Executive Director,
Corporate
Anthony Rozic
Chief Executive Officer,
North America,
and Deputy Group
Chief Executive Officer
+ Successfully overseeing Brazil, playing a critical role in communicating and reinforcing the Group’s strategy,
both from a real estate and corporate perspective
+ Delivered strong outperformance against all key performance and financial parameters
+ Played a key role in overseeing a successful third year of the Brazil Investment Partnership with strong
transactional and development activity resulting in a total return of more than 25%
+ Continued to secure significant infill land banks in core markets (potential gross lettable area (GLA) 270,000
sqm), positioning the Partnership in a strong position to capitalise on the growing e-commerce penetration
+ Construction starts on major development sites (GLA 247,000 sqm) after obtaining building permits.
Successful progress of permit processes on sites acquired during the year which will allow start of
construction in FY22
+ All development projects on budget and schedule despite the challenging pandemic context in Brazil.
+ Provided guidance and team coaching in a complex acquisition and development environment effecting
above-target performance
+ Embedded key controls and culture with the team working cohesively and capability increasing
+ Drove further integration of the Brazil operation into the global network
+ Provided advice and support to senior management in Continental Europe. Repositioning of the CE business
was further refined (with the sale of the Central and Eastern European business). The platform delivered
another year of very strong financial outperformance
+ Important direct link for the Board to the operations in Continental Europe and Brazil
+ Further embedded key controls and culture with the team working cohesively and increasing capability.
+ All financial measures have exceeded budget
+ Critical role in communicating and reinforcing the Group’s strategy in the region
+ Managed a focused and motivated team with an emphasis on succession planning and strong leadership
in embedding the Goodman values in the behaviour of the team and encouraging teamwork with respect
+ With the COVID-19 disruption and employees working remotely, a high level of productivity has been
maintained with a focus on key operational priorities
+ Developed a high-quality portfolio and strongly differentiated brand position and building team capabilities
and skill sets for complex acquisitions and developments ahead of future growth
+ Commenced five development projects with a value of $810 million
+ Continued to grow infill development pipeline of $2.8 billion in major US gateway cities providing strong
positioning for future performance
+ Successfully oversaw strong growth in business operations in North America:
– AUM grown to $4.8 billion
– Stabilised occupancy of 100%
– WALE of 7.9 years
– Total available liquidity in the Partnership US$3.0 billion
+ Positioned the North American business over FY21 with a number of developments pre-leased and
replenishing the land/value-add inventory. Emphasis on developing major infill sites and value-add
development skillsets.
57
Goodman Group
Directors’ report
Remuneration report – audited (continued)
Nick Kurtis
Group Head of Equities
+ Formulated and implemented the Partnerships’ strategies to successfully deliver significant total returns.
Partnership investment portfolio delivered:
– Annualised average total return on net assets of 17.7% (based on the respective Partnership reporting periods)
+ Delivered strong performance metrics including:
– Management earnings contribution of $459 million to the Group’s operating earnings of $459 million
– Performance fee revenue of $149 million
– Growth in external AUM up 12% to $57.9 billion across 16 Partnerships in 14 countries
+ Strong asset selection focus resulting in superior property level returns
+ Fostered strong investor relationships and successful communication of Partnership strategies and alignment
of interests with investors
+ Successfully executed continuation of several Partnerships through the course of FY21
+ Established new Partnerships with investors
+ Provided strategic advice across a range of corporate and structural transactions in the business to position
opportunities for future years.
Michael O’Sullivan
Group Chief Risk Officer
+ Responsible for identifying, assessing and monitoring risks at Goodman Group and reporting to the Risk and
Compliance Committee
+ Oversaw and aligned the Group Investment Committee (GIC) process with strategy execution to ensure final
commercial outcomes remain consistent with Group strategy. A requested member of regional due diligence
committee meetings relating to major acquisitions, disposals, and capital market transactions
+ Performs a critical role in commercial oversight and assessment of globally complex transactions of the Group
to allow the required level of autonomy at a regional level within delegated authority limits
+ Maintained frameworks with improved outcomes across the Group and Managed Partnerships in FY21
adapting to the changing nature of our business including nature, scale and complexity of development
projects globally
+ Responsible for co-ordination and reporting of Group Corporate Service functions, specifically as they relate to
the identification and monitoring of non-financial risks with specific reference to internal audit, safety, sustainability,
insurance and business continuity planning. Successfully transitioned the Knowledge Management function to
Group IT while remaining a resource for the Group Chief Information Officer to call upon
+ FY21 saw continued Group activities, in relation to GIC process including:
– Over 400 GIC submissions with 15% involving detailed involvement from the Group Risk function
– Work in progress of $10.6 billion with an annual production rate of $6.6 billion
– $4.2 billion of asset sales, including both the disposals of directly held developments and disposals to
external parties globally
– $6.4 billion of global acquisitions and development expenditure
– 16 business plans and Partnership strategy proposals across $54.0 billion of external AUM, in which the
Group’s equity investment was $10.7 billion.
+
+
+
+
+
+
+
+
Successfully developed and played a key role in the execution of the business strategy including the
management and allocation of capital that has delivered strong returns to investors over several years
culminating in FY21 operating profit of over $1.2 billion
Full oversight of balance sheet and profit and loss outcomes for the Group and Partnerships across multiple
jurisdictions in 14 countries. Effective statutory and management financial reporting giving clarity to support
strong operational decision making
Built improvements and resilience into systems and controls framework. Strengthened monitoring,
coordination and consolidation of financial performance and financial position of regional business units and
divisions to exceed budget and financial plans
Effected strong capital management and compliance with Financial Risk Management policies of Group
and Partnerships
Established and oversaw debt finance transactions in banking and debt capital markets of $5.4 billion for the
Group and its Partnerships, adding term to maturity profile and diversity of funding sources
Effective hedging and financial risk management. Involved in and oversaw derivative and hedge transactions
of over $5.6 billion for the Group and its Partnerships. Progressed framework for future risk mitigation measures
and appropriate enhancements in line with changing nature of the business and industry
Led operational improvements in relation to business IT systems and processes, particularly considering the
necessary changes that COVID-19 has given rise to
Updated and improved various operational policies to enhance compliance and reduce risk. Has demonstrated
an ability to manage through variable market conditions. Maintains valuable relationships in the capital markets.
Nick Vrondas
Group Chief
Financial Officer
58
Annual Report 2021
4.5 LTI grants to be made in September 2021 in relation to FY21 performance
The remuneration awards made by the Board in respect of the executive KMP performance in FY21 comprise fixed
remuneration, STI and awards under the LTIP that will be made in September 2021.
The table below lists the maximum number of performance rights which could vest if the highest hurdles are met over the four
years ending 30 June 2025. The minimum vesting percentage is 0% if hurdles are not met. The vesting of those performance
rights that achieve the performance hurdles (if any) will occur in seven equal tranches in September each year, starting from
September 2025 with the last tranche vesting ten years from initial grant in September 2031.
The value of the grants that the Board intends to make in September 2021, in respect of the executive KMP performance in
FY21, have been determined using the economic value as detailed in section 3.4
Executive
Gregory Goodman
Danny Peeters
Anthony Rozic
Nick Kurtis
Michael O’Sullivan
Nick Vrondas
Year of grant
Performance
rights proposed
Economic value per
performance right
Economic value
of grant
FY22
FY22
FY22
FY22
FY22
FY22
1,560,000
625,000
690,000
805,000
560,000
690,000
6.10
6.10
6.10
6.10
6.10
6.10
9.5
3.8
4.2
4.9
3.4
4.2
5. NON-EXECUTIVE
DIRECTOR REMUNERATION
5.1 Key elements of the Non-Executive Director remuneration policy
–
–
–
–
–
–
–
The policy is structured to ensure independence of judgement in the performance of their duties.
Non-Executive Directors receive fixed fees for Board membership and additional fees for membership of committees.
The fees consider the size and scope of Goodman’s activities and the responsibilities and experience of the Directors.
Periodically, these fees are benchmarked against data for comparable entities provided by external advisers.
As approved by Securityholders at the 2006 Annual General Meeting, total remuneration (including superannuation) payable by
Goodman to all Non-Executive Directors in aggregate must not exceed $2.5 million per annum. For the current financial year,
total Non-Executive Directors’ remuneration was $2.4 million (2020: $2.2 million).
The increase in Non-Executive Director fees compared to the prior financial year was due to the change in composition of the
Board and the establishment of a separate Nomination Committee. There were no changes to the Board and committee annual
fees in respect of FY21.
Non-Executive Directors are not entitled to participate in any STI or LTI schemes as they may be perceived to create a bias
when overseeing executive decision making.
To align the interests of the Board with Securityholders, the Board updated the Directors’ Security Holding
Policy in April 2021. The policy requires Non-Executive Directors to accumulate and hold Goodman securities with a value
equivalent to their pre-tax annual base fee within three years of appointment, or in the case of the Chairman the pre-tax
Chairman’s fee within three years of appointment as Chairman (subject to a transitional year following adoption of the new
policy). For the purpose of this policy, the value of each parcel acquired is the higher of the purchase price or market value at
the end of the financial year.
59
Goodman Group
Directors’ report
Remuneration report – audited (continued)
5.2 Board and committee annual fees
The Board and committee fees that applied for FY21 are set out below.
Chairman
Member
Board $
625,000
230,000
Audit
Committee
$
50,000
25,000
Risk and
Compliance
Committee
$
40,000
25,000
Remuneration
Committee
$
Nomination
Committee
$
40,000
25,000
n/a
25,000
With effect from 1 July 2021, the Board has decided to increase the remuneration of Non-Executive Directors for the first time since
June 2018. The new Board and Committee annual fees are set out below.
Chairman
Member
Board $
625,000
240,000
Audit
Committee
$
60,000
30,000
Risk and
Compliance
Committee
$
50,000
30,000
Remuneration
Committee
$
Nomination
Committee
$
40,000
30,000
n/a
30,000
The remuneration of the Non-Executive Director of GLHK will also increase to HK$680,000 (2021: HK$625,000).
60
Annual Report 2021
6. STATUTORY DISCLOSURES
6.1 KMP remuneration (statutory analysis)
Details of the nature and amount of each major element of the remuneration of each executive KMP, as calculated under Australian
Accounting Standards, are set out below:
Long-term
4
,
3
r
e
h
t
O
$
n
o
i
t
a
u
n
n
a
s
t
fi
e
n
e
b
-
r
e
p
u
S
$
l
a
t
o
T
$
11,201 1,458,599
21,694
17,169 1,413,498
21,003
12,468
719,581
21,694
18,010
705,663
21,003
s
u
n
o
B
2
)
I
T
S
(
$
–
–
–
–
Share
based
payments
e
c
n
a
m
r
o
f
r
e
P
5
)
I
T
L
(
s
t
h
g
i
r
$
3
r
e
h
t
O
$
Performance
related
%
s
a
I
T
L
d
n
a
I
T
S
%
s
a
I
T
L
l
a
t
o
t
f
o
%
%
l
a
t
o
T
$
44,203
11,854,105 13,378,601
88.6
88.6
24,841
10,534,692
11,994,033
87.8
87.8
17,509
4,742,939
5,501,723
86.2
86.2
12,414
3,740,638
4,479,717
83.5
83.5
11,423
485,556
21,694
500,000
13,242
3,336,045
4,356,547
16,500
503,775
21,003
400,000
(891)
2,493,876
3,417,763
11,423
691,169
21,694
700,000
18,073
4,598,229
6,029,165
16,500
652,320
21,003
600,000
12,421
3,783,979
5,069,723
88.1
84.7
87.9
86.5
76.6
73.0
76.3
74.6
€
–
–
€
593,400
593,400
€
–
–
€
700,000
700,000
€
–
–
€
€
2,656,555
3,949,955
2,070,939
3,364,339
85.0
82.4
67.3
61.6
s
u
n
o
B
2
)
I
T
S
(
$
–
–
–
–
–
–
–
–
€
–
–
1
s
e
e
f
d
n
a
y
r
a
l
a
S
$
FY21 1,447,398
FY20 1,396,329
Executive
KMP
Gregory
Goodman
Nick Kurtis FY21
707,113
FY20
687,653
FY21
474,143
FY20
487,275
FY21
679,746
FY20
635,820
€
FY21
593,400
FY20
593,400
Michael
O’Sullivan
Nick
Vrondas
Danny
Peeters6
Anthony
Rozic7
US$
US$
US$
US$
US$
US$
US$
US$
US$
FY21
697,211
FY20
680,039
–
–
29,466
726,677
16,210 1,050,000
(1,715)
3,445,575
5,236,747
85.8
65.8
170,587
850,627
14,102 1,050,000
14,766
2,548,576
4,478,071
80.4
56.9
Executive KMP are engaged under written employment contracts until notice is given by either Goodman or the executive KMP.
Notice periods are for six months except for Gregory Goodman and Danny Peeters for whom the period is 12 months. Danny Peeters
provides his services through a management company, DPCON Bvba.
1.
2.
3.
4.
5.
6.
7.
Salary and fees represent the amounts due under the terms of executives’ service contracts and include movements in annual leave provisions.
Executives’ bonus (STI) awards are paid in two instalments: 50% on finalisation of Goodman’s financial statements and 50% 12 months later. Under Australian
Accounting Standards, this means the entire bonus award is considered as a long-term benefit with regard to the disclosure of individual executive’s remuneration.
No bonuses were forfeited during the financial year.
Other includes reportable fringe benefits, car parking and changes in long service leave provisions.
In the prior year, the Board agreed certain tax equalisation arrangements with Anthony Rozic in connection with his employment arrangements in the United States
and Australia to ensure that he was no better or worse off. As a result, in FY20 Goodman made additional tax related payments of US$150,005 in respect of the period
prior to 1 January 2019. These amounts were on top of Anthony Rozic’s Australian tax obligations for which he remained exclusively responsible. The Board also
advanced under an interest free loan, double-tax amounts in respect of the period prior to 1 January 2019 for which Foreign Income Tax Offsets from the Australian
Taxation Office will be used to repay the advances.
At 1 July 2021 the advances made by Goodman amounted to US$503,729, and as there have been no further advances or repayments during the year ended 30
June 2021, the balance at 30 June 2021 is also US$503,729. The amount of interest that would have been payable if charged on an arm's-length basis during the year
is $20,149 (2020: $8,490). The notional interest amount has been included in Anthony Rozic’s statutory remuneration for FY21 (Other remuneration). In the prior year
both the additional tax related amount and the notional interest amount were included in Anthony Rozic’s statutory remuneration (Other remuneration).
No other executive KMP received a loan from the Group during the current or prior financial years.
Performance rights are an LTI and in accordance with Australian Accounting Standards: the values of the awards are determined using option pricing models and
amortised in the income statement over the vesting periods.
The remuneration of Danny Peeters is disclosed in Euros, the currency in which his base remuneration and STI are determined. The value attributed to his
performance rights is translated from Australian dollars at the weighted average rate for the relevant financial year.
The remuneration of Anthony Rozic is disclosed in US dollars, the currency in which his base remuneration and STI are determined. The value attributed to his
performance rights is translated from Australian dollars at the weighted average rate for the relevant financial year.
61
Goodman Group
Directors’ report
Remuneration report – audited (continued)
6.2 Movements in performance rights held by executive KMP
The movements in the number of performance rights during FY21 are summarised as follows:
Executive Directors
Gregory Goodman
Danny Peeters
Anthony Rozic
Other executive KMP
Nick Kurtis
Michael O’Sullivan
Nick Vrondas
Year
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
Held at the start
of the year
Granted as
compensation
Vested
Forfeited
Held at the end
of the year
6,350,000
7,231,827
1,996,250
2,158,413
2,241,666
2,470,996
2,290,416
2,568,495
1,503,750
1,607,018
2,323,750
2,603,412
950,000
900,000
380,000
350,000
400,000
380,000
490,000
380,000
340,000
300,000
420,000
380,000
(1,983,333)
(1,781,827)
(529,583)
(512,163)
(628,333)
(609,330)
(677,083)
(658,079)
(393,750)
(403,268)
(693,750)
(659,662)
–
–
–
–
–
–
–
–
–
–
–
–
5,316,667
6,350,000
1,846,667
1,996,250
2,013,333
2,241,666
2,103,333
2,290,416
1,450,000
1,503,750
2,050,000
2,323,750
6.3 Analysis of performance rights held by executive KMP
Details of the awards of performance rights under the LTIP granted by Goodman as compensation to the executive KMP are set
out in the following tables:
e
c
n
a
m
r
o
f
r
e
p
e
t
a
D
d
e
t
n
a
r
g
s
t
h
g
i
r
1
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
l
r
e
p
e
u
a
v
r
i
a
F
f
o
e
u
a
v
l
l
a
t
o
$ T
1
d
e
t
n
a
r
g
s
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
r
a
e
Y
s
r
a
e
y
r
o
i
r
p
n
i
2
r
a
e
y
e
h
t
n
i
d
e
t
s
e
$ V
d
e
t
s
e
% V
d
e
t
i
e
f
r
o
% F
f
o
e
u
a
% V
l
d
e
t
n
a
r
g
s
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
f
o
r
e
b
m
u
N
Executive
Directors
Gregory
Goodman
950,000
19 Nov 2020
FY21
16.07
15,266,500
900,000
20 Nov 2019
FY20
11.48
10,332,000
1,600,000
15 Nov 2018
1,600,000
16 Nov 2017
2,400,000
30 Sep 2016
FY19
FY18
FY17
8.72
13,952,000
6.70
10,720,000
5.64 13,536,000
2,000,000
25 Nov 2015
FY16
4.44
8,880,000
Danny Peeters
380,000
19 Nov 2020
FY21
16.07
6,106,600
350,000
20 Nov 2019
FY20
11.48
4,018,000
550,000
15 Nov 2018
550,000
16 Nov 2017
600,000
30 Sep 2016
FY19
FY18
FY17
450,000
25 Nov 2015
FY16
8.72
6.70
5.64
4.44
4,796,000
3,685,000
3,384,000
1,998,000
Anthony Rozic
400,000
19 Nov 2020
FY21
16.07
6,428,000
380,000
20 Nov 2019
FY20
11.48
4,362,400
600,000
15 Nov 2018
600,000
16 Nov 2017
700,000
30 Sep 2016
FY19
FY18
FY17
600,000
25 Nov 2015
FY16
8.72
6.70
5.64
4.44
5,232,000
4,020,000
3,948,000
2,664,000
Refer to page 63 for explanatory footnotes.
62
–
–
–
–
33.3
65.0
–
–
–
–
33.3
65.0
–
–
–
–
33.3
65.0
–
–
–
33.3
33.3
32.5
–
–
–
33.3
33.3
32.5
–
–
–
33.3
33.3
32.5
–
–
–
–
–
s
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
3
r
a
e
y
e
h
t
n
i
d
e
t
s
e
v
$
–
–
–
i
h
c
h
w
n
i
s
r
a
e
y
s
t
s
e
v
t
n
a
r
g
4
e
t
a
d
y
r
i
p
x
E
l
i
a
c
n
a
n
F
i
2024–2026
1 Sep 2025
2023–2025
2 Sep 2024
2022–2024
1 Sep 2023
9,567,994
2021–2023
1 Sep 2022
14,352,000 2020–2022
1 Sep 2021
2.5
11,661,000
2019–2021
1 Sep 2020
–
–
–
–
–
–
–
–
2024–2026
1 Sep 2025
2023–2025
2 Sep 2024
2022–2024
1 Sep 2023
3,288,994
2021–2023
1 Sep 2022
3,588,000 2020–2022
1 Sep 2021
2.5
2,623,725
2019–2021
1 Sep 2020
–
–
–
–
–
–
–
–
2024–2026
1 Sep 2025
2023–2025
2 Sep 2024
2022–2024
1 Sep 2023
3,588,000
2021–2023
1 Sep 2022
4,185,994 2020–2022
1 Sep 2021
2.5
3,498,300
2019–2021
1 Sep 2020
Annual Report 2021
i
h
c
h
w
n
i
s
r
a
e
y
s
t
s
e
v
t
n
a
r
g
4
e
t
a
d
y
r
i
p
x
E
l
i
a
c
n
a
n
F
i
2024–2026 1 Sep 2025
2023–2025 2 Sep 2024
2022–2024 1 Sep 2023
s
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
3
r
a
e
y
e
h
t
n
i
d
e
t
s
e
v
$
–
–
–
–
–
–
–
–
3,588,000
2021–2023 1 Sep 2022
4,185,994
2020–2022 1 Sep 2021
2.5
4,372,875
2019–2021 1 Sep 2020
–
–
–
–
–
–
–
–
2024–2026 1 Sep 2025
2023–2025 2 Sep 2024
2022–2024 1 Sep 2023
2,332,200
2021–2023 1 Sep 2022
2,691,000
2020–2022 1 Sep 2021
2.5
2,040,675
2019–2021 1 Sep 2020
–
–
–
–
–
–
–
–
2024–2026 1 Sep 2025
2023–2025 2 Sep 2024
2022–2024 1 Sep 2023
3,588,000
2021–2023 1 Sep 2022
4,485,000
2020–2022 1 Sep 2021
2.5
4,372,875
2019–2021 1 Sep 2020
%
s
r
a
e
y
–
–
–
–
33.3
65.0
–
–
–
–
33.3
65.0
–
–
–
–
33.3
65.0
–
–
–
33.3
33.3
32.5
–
–
–
33.3
33.3
32.5
–
–
–
33.3
33.3
32.5
d
e
t
n
a
r
g
s
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
f
o
r
e
b
m
u
N
e
c
n
a
m
r
o
f
r
e
p
e
t
a
D
d
e
t
n
a
r
g
s
t
h
g
i
r
1
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
l
r
e
p
e
u
a
v
r
i
a
F
r
a
e
Y
f
o
e
u
a
v
l
l
a
t
o
$ T
1
d
e
t
n
a
r
g
s
t
h
g
i
r
e
c
n
a
m
r
o
f
r
e
p
r
o
i
r
p
n
i
d
e
t
s
e
$ V
Other executive
KMP
Nick Kurtis
490,000
30 Sep 2020
FY21
15.77
7,727,300
2
r
a
e
y
e
h
t
n
i
d
e
t
s
e
V
d
e
t
i
e
f
r
o
% F
f
o
e
u
a
% V
l
380,000
30 Sep 2019
FY20
11.26
4,278,800
600,000
28 Sep 2018
600,000
30 Sep 2017
700,000
30 Sep 2016
FY19
FY18
FY17
750,000
23 Sep 2015
FY16
8.52
6.41
5.64
4.06
5,112,000
3,846,000
3,948,000
3,045,000
Michael O’Sullivan
340,000
30 Sep 2020
FY21
15.77
5,361,800
300,000
30 Sep 2019
FY20
11.26
3,378,000
400,000
28 Sep 2018
390,000
30 Sep 2017
450,000
30 Sep 2016
FY19
FY18
FY17
350,000
23 Sep 2015
FY16
8.52
6.41
5.64
4.06
3,408,000
2,499,900
2,538,000
1,421,000
Nick Vrondas
420,000
30 Sep 2020
FY21
15.77
6,623,400
380,000
30 Sep 2019
FY20
11.26
4,278,800
600,000
28 Sep 2018
600,000
30 Sep 2017
750,000
30 Sep 2016
FY19
FY18
FY17
750,000
23 Sep 2015
FY16
8.52
6.41
5.64
4.06
5,112,000
3,846,000
4,230,000
3,045,000
Footnotes to the analysis of executive KMP performance rights table:
1.
The fair value was determined at grant date and calculated using a combination of the standard Black Scholes model with a continuous dividend/distribution yield and
a Monte Carlo model which simulated total returns for each of the ASX 100 entities and discounted the future value of any potential future vesting performance rights
to arrive at a present value.
As performance rights had an exercise price of $nil, Goodman securities were automatically issued to employees when the performance rights vested. Accordingly,
the percentage of performance rights that vested during the financial year equalled the percentage of securities issued during the financial year.
The value of performance rights vested was calculated using the closing price of a Goodman security on the ASX of $17.94 on 1 September 2020, the day the
performance rights vested.
As Goodman securities were automatically issued to employees when the performance rights vested, and lapsed where they failed to do so, the vesting date was also
deemed to be the expiry date.
2.
3.
4.
6.4 Securities issued on exercise of performance rights
During FY21, Goodman issued 15,438,241 securities as a result of the vesting of performance rights. The amount paid by the
employees on exercise of these securities was $nil.
No performance rights have vested since the end of the financial year.
6.5 Unissued securities under performance rights
At the date of this Directors’ report, unissued securities of Goodman under performance rights, i.e. those performance rights
that have not yet vested, were:
Expiry date
Sep 2025
Sep 2024
Sep 2023
Sep 2022
Sep 2021
Exercise price $
Number of performance rights1
–
–
–
–
–
12,461,933
10,824,964
16,012,338
9,747,941
5,759,671
1.
The number of performance rights at the date of this Directors’ report is net of any rights forfeited and excludes 13,833,873 performance rights where the intention is to
cash settle.
63
Goodman Group
Directors’ report
Remuneration report – audited (continued)
6.6 Non-Executive Directors’ remuneration (statutory analysis)
Details of the nature and amount of each major element of the remuneration of Non-Executive Directors, as calculated under
Australian Accounting Standards, are set out below:
Non-Executive Directors – GL and GFML
Salary and fees
$
Superannuation benefits
$
Stephen Johns1
Ian Ferrier 2
Christopher Green
Mark Johnson3
Rebecca McGrath
Phillip Pryke4
Penny Winn
Non-Executive Director – GLHK
David Collins5
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
480,131
283,997
234,619
603,997
264,062
255,000
264,060
19,500
282,368
273,997
357,068
359,354
258,306
258,997
HK$
625,000
625,000
21,694
21,003
8,437
21,003
–
–
21,694
1,750
21,694
21,003
21,694
21,003
21,694
21,003
HK$
–
–
Total
$
501,825
305,000
243,056
625,000
264,062
255,000
285,754
21,250
304,062
295,000
378,762
380,357
280,000
280,000
HK$
625,000
625,000
1. Stephen Johns was appointed Chairman on 19 November 2020.
2.
Ian Ferrier retired as a Director on 19 November 2020.
3. Mark Johnson was appointed as a Director on 1 June 2020.
4.
Salary and fees for Phillip Pryke included an amount of A$83,760 (NZ$90,000) (2020: A$85,357 (NZ$90,000)) due in respect of his role on the board and audit
committee of Goodman (NZ) Limited, the manager of Goodman Property Trust.
5. David Collins is a director of GLHK and his director fees are disclosed in Hong Kong dollars.
64
Annual Report 2021
6.7 Movements in Goodman securities held
The movements during the financial year in the number of Goodman securities held, directly, indirectly or beneficially, by each
KMP, including their related parties, are set out below:
Non-Executive
Directors –
GL and GFML
Stephen Johns
Ian Ferrier
Christopher Green
Mark Johnson
(appointed 1 Jun 2020)
Rebecca McGrath
Phillip Pryke
Penny Winn
Non Executive Directors – GLHK
David Collins
Year
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
Executive Directors – GL and GFML
Gregory Goodman
Danny Peeters
Anthony Rozic
Other executive KMP
Nick Kurtis
Michael O’Sullivan
Nick Vrondas
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
Held at
the start of
the year1
Securities issued
on vesting of
performance rights
Acquisitions
Disposals
25,000
25,000
208,325
202,922
78,996
78,996
–
–
42,144
39,540
59,880
100,880
24,700
24,700
5,000
5,000
38,104,547
38,102,720
2,103,548
1,591,385
1,475,958
1,109,460
503,330
407,140
666,601
464,967
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,983,333
1,781,827
529,583
512,163
628,333
609,330
677,083
658,079
393,750
403,268
693,750
659,662
16,182
–
1,893
5,403
–
–
5,000
–
917
2,604
–
–
–
–
–
–
–
5,000
–
–
–
–
–
–
–
–
–
–
39
–
–
–
–
–
–
–
–
–
–
(41,000)
–
–
–
–
(1,600,000)
(1,785,000)
(1,000,000)
–
(894,831)
(242,832)
(626,127)
(561,889)
(217,232)
(201,634)
(563,841)
(659,662)
Held at
the end of
the year 2
41,143
25,000
210,218
208,325
78,996
78,996
5,000
–
43,061
42,144
59,880
59,880
24,700
24,700
5,000
5,000
38,487,880
38,104,547
1,633,131
2,103,548
1,209,460
1,475,958
554,286
503,330
843.119
666,601
129,909
–
1. Relates to securities held at the later of the start of the financial year or the date of becoming a KMP.
2. Relates to securities held at the earlier of the end of the financial year or the date of ceasing to be a KMP.
6.8 Transactions with Directors, executives and their related entities
GreenPoint Real Estate Innovation and Technology Venture, LP
On 16 July 2020, the Group committed to investing USD15.0 million in GreenPoint Real Estate Innovation and Technology Venture, LP,
a property technology fund that is a Delaware limited partnership, managed by Greenpoint Group LP, also a Delaware limited partnership.
Greenpoint Group LP is beneficially owned and controlled by Christopher Green, a Director of Goodman Limited. As at 30 June 2021,
the Group had invested USD3,826,595.
Other than as disclosed elsewhere in the remuneration report, there were no other transactions with Directors, executives, and their
related entities.
65
Goodman Group
Directors’ report
Environmental regulations
Goodman has policies and procedures to identify and
appropriately address environmental obligations that might
arise in respect of Goodman’s operations that are subject to
significant environmental laws and regulation. The Directors
have determined that Goodman has complied with those
obligations during the financial year and that there has not
been any material breach.
Declaration by the Group Chief Executive Officer
and Group Chief Financial Officer
The Group Chief Executive Officer and Group Chief Financial
Officer declared in writing to the Board that, in their opinion,
the financial records of Goodman for the year ended 30 June
2021 have been properly maintained and the financial report
for the year ended 30 June 2021 complies with accounting
standards and presents a true and fair view of Goodman’s
financial condition and operational results. The Group Chief
Executive Officer and Group Chief Financial Officer confirmed
that the above declaration was, to the best of their knowledge
and belief, founded on a sound system of risk management
and internal control and that the system was operating
effectively in all material respects in relation to the financial
reporting risks.
Disclosure in respect of any indemnification
and insurance of officers and auditors
Pursuant to the Constitution of Goodman, current and
former Directors and officers of Goodman are entitled to
be indemnified. Deeds of Indemnity have been executed
by Goodman, consistent with the Constitution, in favour of
each Director. The Deed indemnifies each Director to the
extent permitted by law for liabilities (other than legal costs)
incurred in their capacity as a director of Goodman Limited or
a controlled entity and, in respect of legal costs, for liabilities
incurred in defending or resisting civil or criminal proceedings.
Goodman has insured, to the extent permitted by law, current
and former Directors and officers of Goodman in respect of
liability and legal expenses incurred in their capacity as a
director or officer. As it is prohibited under the terms of the
contract of insurance, the Directors have not included details
of the nature of the liabilities covered or the amount of the
premiums paid.
The auditors of Goodman are not indemnified by Goodman or
covered in any way by this insurance in respect of the audit.
Non-audit services
During the financial year, KPMG, Goodman and GIT’s auditor,
performed certain other services in addition to the audit and
review of the financial statements.
The Board has considered the non-audit services provided
during the financial year by the auditor and, in accordance
with written advice authorised by a resolution of the Audit
66
Committee, resolved that it is satisfied that the provision
of those non-audit services during the financial year by the
auditor is compatible with, and did not compromise, the
auditor independence requirements of the Corporations Act
2001 for the following reasons:
+
+
All non-audit services were subject to the corporate
governance procedures adopted by Goodman and have
been reviewed by the Audit Committee to determine they
do not impact the integrity and objectivity of the auditor
The non-audit services provided do not undermine the
general principles relating to auditor independence as
set out in APES 110 Code of Ethics for Professional
Accountants, as they did not involve reviewing or auditing
the auditor’s own work, acting in a management or
decision making capacity for Goodman, acting as an
advocate for Goodman or jointly sharing risks and rewards.
Details of the amounts paid to the auditor of Goodman and
GIT, KPMG and its network firms, for the audit and non-audit
services provided during the financial year, are set out in note
26 to the consolidated financial statements.
Lead auditor’s independence declaration under
section 307C of the Corporations Act 2001
The lead auditor’s independence declaration is set out on page 67
and forms part of this Directors’ report for the financial year.
Rounding
Goodman and GIT are entities of a kind referred to in ASIC
Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191. In accordance with that Instrument,
amounts in this Directors’ report and the consolidated financial
statements have been rounded to the nearest hundred
thousand dollars, unless otherwise stated.
Events subsequent to balance date
There has not arisen in the interval between the end of the
financial year and the date of this report any item, transaction
or event of a material and unusual nature likely, in the opinion
of the Directors, to affect significantly the operations of
Goodman, the results of those operations, or the state of
affairs of Goodman, in future financial years.
The Directors’ report is made in accordance with a resolution
of the Directors.
Stephen Johns
Independent Chairman
Sydney, 12 August 2021
Gregory Goodman
Group Chief Executive Officer
Annual Report 2021
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Goodman Limited and Goodman Funds Management Limited, as Responsible Entity for Goodman
Industrial Trust
I declare that, to the best of my knowledge and belief, in relation to the audits of Goodman Limited (as the deemed parent
presenting the stapled security arrangement of the Goodman Group) and Goodman Industrial Trust for the financial year ended
30 June 2021, there have been:
(i)
no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audits;
and
(ii) no contraventions of any applicable code of professional conduct in relation to the audits.
KPMG
Eileen Hoggett
Partner
Sydney, 12 August 2021
KPMG, an Australian partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private
English company limited by guarantee. All rights reserved, The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG
global organization, Liability limited by a scheme approved under Professional Standards Legislation.
67
Goodman Group
Consolidated statements of financial position
as at 30 June 2021
Current assets
Cash and cash equivalents
Receivables
Contract assets
Inventories
Other financial assets
Assets held for sale
Total current assets
Non-current assets
Receivables
Inventories
Investment properties
Investments accounted for using the equity method
Deferred tax assets
Other financial assets
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
Current liabilities
Payables
Current tax payables
Interest bearing liabilities
Provisions
Lease liabilities
Other financial liabilities
Total current liabilities
Non-current liabilities
Payables
Interest bearing liabilities
Deferred tax liabilities
Provisions
Lease liabilities
Other financial liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity attributable to Securityholders
Issued capital
Reserves
Retained earnings
Total equity attributable to Securityholders
Comprising:
Total equity attributable to GL
Total equity attributable to other entities stapled to GL
Total equity attributable to Securityholders
Note
21(a)
7
8
6(b)
17
9
7
6(b)
6(b)
6(b)
5(e)
17
12
14
10
5(d)
16
11
13
17
10
16
5(e)
11
13
17
20
22(a)
22(b)
Goodman
2021
$M
920.4
331.3
80.9
235.1
16.5
41.5
2020
$M
1,781.9
282.3
25.7
544.1
59.3
112.5
GIT
2021
$M
379.8
816.1
–
–
16.5
–
2020
$M
1,302.6
1,602.1
–
–
59.3
–
1,625.7
2,805.8
1,212.4
2,964.0
277.5
1,192.7
1,851.2
10,660.0
19.9
362.8
54.6
822.6
108.3
636.1
1,901.2
9,370.8
10.5
408.8
50.9
845.8
2,528.5
5.9
1,155.7
8,078.4
–
314.4
–
–
1,487.4
5.9
1,202.4
7,148.3
–
444.1
–
–
15,241.3
16,867.0
13,332.4
16,138.2
12,082.9
13,295.3
10,288.1
13,252.1
565.9
160.1
–
294.2
11.9
1.9
584.5
140.8
260.1
289.4
17.6
50.4
607.6
–
–
166.3
–
1.9
655.3
–
260.1
201.1
–
50.4
1,034.0
1,342.8
775.8
1,166.9
125.5
2,060.3
168.4
23.7
82.1
211.5
2,671.5
3,705.5
13,161.5
8,096.4
134.8
4,930.3
13,161.5
1,635.6
11,525.9
13,161.5
85.4
2,678.4
121.8
29.0
29.2
331.0
3,274.8
4,617.6
11,520.6
8,031.7
384.7
3,104.2
11,520.6
1,278.0
10,242.6
11,520.6
232.2
2,062.8
124.0
–
–
124.6
2,543.6
3,319.4
9,975.9
7,849.0
(33.7)
2,160.6
9,975.9
231.5
2,679.4
82.3
–
–
302.6
3,295.8
4,462.7
8,789.4
7,623.5
136.7
1,029.2
8,789.4
9,975.9
8,789.4
The consolidated statements of financial position are to be read in conjunction with the accompanying notes.
68
Consolidated income statements
for the year ended 30 June 2021
Goodman
2021
$M
2020
$M
Note
Annual Report 2021
GIT
2021
$M
60.2
–
–
9.1
69.3
(20.2)
(2.3)
(22.5)
60.2
39.3
2020
$M
67.9
–
0.3
9.9
78.1
(23.0)
(1.0)
(24.0)
36.5
9.1
112.4
383.9
1,492.0
–
115.9
511.2
882.6
1.2
1,988.3
1,510.9
(32.8)
(862.3)
(895.1)
63.1
37.7
(36.4)
(443.4)
(479.8)
45.2
54.5
2
2
2
2
6(e)
6(f)
2
2
2
15
15
1,708.9
1,022.2
1,373.8
825.5
5.0
0.6
3.2
1,814.7
1,122.5
1,476.5
(210.8)
(268.8)
(83.2)
–
(203.7)
(164.0)
(88.6)
–
(562.8)
(456.3)
–
–
(52.1)
17.6
(34.5)
2,345.1
1,697.3
1,488.8
94.3
(19.4)
74.9
13.2
(93.4)
(80.2)
177.9
(42.4)
135.5
0.1
871.2
–
–
(54.0)
–
(54.0)
871.3
133.1
(157.2)
(24.1)
847.2
(11.1)
2,420.0
1,617.1
1,624.3
5(a)
(108.1)
(113.0)
(49.5)
2,311.9
1,504.1
1,574.8
836.1
22(a)
22(b)
3
3
300.2
315.9
2,011.7
1,188.2
2,311.9
1,504.1
125.4
122.1
82.4
80.0
Revenue
Gross property income
Management income
Development income
Distributions from investments
Property and development expenses
Property expenses
Development expenses
Other income
Net gain from fair value adjustments on investment properties
Net gain on disposal of investment properties
Share of net results of equity accounted investments
Net gain on disposal of equity investments
Other expenses
Employee expenses
Share based payments expense
Administrative and other expenses
Reversal of previous impairments
Profit before interest and tax
Net finance income/(expense)
Finance income
Finance expense
Net finance income/(expense)
Profit before income tax
Income tax expense
Profit for the year
Profit attributable to GL
Profit attributable to other entities stapled to GL
Profit for the year attributable to Securityholders
Basic profit per security (¢)
Diluted profit per security (¢)
The consolidated income statements are to be read in conjunction with the accompanying notes.
69
Goodman Group
Consolidated statements of comprehensive income
for the year ended 30 June 2021
Profit for the year
Other comprehensive income/(loss) for the year
Items that will not be reclassified to profit or loss
Actuarial losses on defined benefit superannuation funds
Effect of foreign currency translation
Goodman
2021
$M
2020
$M
Note
GIT
2021
$M
2,311.9
1,504.1
1,574.8
(6.0)
(0.8)
(6.8)
(8.2)
0.2
(8.0)
–
–
–
2020
$M
836.1
–
–
–
Items that are or may be reclassified subsequently to profit or loss
Increase/(decrease) due to revaluation of other financial assets
0.3
–
(2.2)
(5.6)
Cash flow hedges:
– Change in value of financial instruments
Effect of foreign currency translation
Other comprehensive (loss)/income for the year, net of income tax
Total comprehensive income for the year
Total comprehensive income attributable to GL
Total comprehensive income attributable to other entities stapled to GL
0.3
(278.6)
(278.0)
(284.8)
(1.7)
(26.7)
(28.4)
(36.4)
0.3
(182.2)
(184.1)
(184.1)
(1.7)
32.5
25.2
25.2
2,027.1
1,467.7
1,390.7
861.3
22(a)
22(b)
271.6
281.7
1,755.5
1,186.0
Total comprehensive income for the year attributable to Securityholders
2,027.1
1,467.7
The consolidated statements of comprehensive income are to be read in conjunction with the accompanying notes.
70
Consolidated statements of changes in equity
for the year ended 30 June 2021
Annual Report 2021
l
a
t
i
p
a
c
d
e
u
s
s
I
Note
$M
8,031.7
n
o
i
t
a
u
a
v
e
r
l
e
v
r
e
s
e
r
t
e
s
s
A
$M
(7.1)
Attributable to Securityholders
y
c
n
e
r
r
u
c
n
g
e
r
o
F
i
l
n
o
i
t
a
s
n
a
r
t
e
v
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e
s
e
r
e
v
r
e
s
e
r
e
g
d
e
h
w
o
fl
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s
a
C
n
o
i
t
a
s
n
e
p
m
o
c
e
e
y
o
p
m
E
l
e
v
r
e
s
e
r
t
fi
e
n
e
b
d
e
n
fi
e
D
t
n
e
m
e
r
i
t
e
r
e
v
r
e
s
e
r
s
e
m
e
h
c
s
s
e
v
r
e
s
e
r
l
a
t
o
T
$M
$M
$M
$M
$M
i
d
e
n
a
t
e
R
i
s
g
n
n
r
a
e
$M
l
a
t
o
T
$M
(3.3)
215.0
216.2
(23.3)
397.5 2,093.3 10,522.5
–
–
–
–
(0.1)
(0.2)
(26.4)
–
–
(1.7)
–
–
–
(0.1)
(1.9)
(26.4)
(0.1)
(1.9)
(26.4)
–
–
–
–
–
–
–
–
1,504.1
1,504.1
0.2
(26.5)
–
(1.7)
(8.2)
(8.2)
(8.0)
(36.4)
–
–
–
–
(26.5)
(1.7)
(8.2)
(36.4)
(8.0)
(36.4)
1,504.1
1,467.7
–
–
–
–
–
–
–
–
–
–
–
(55.3)
–
(19.1)
–
–
–
(55.3)
55.3
–
–
(548.5)
(548.5)
(19.1)
–
–
(19.1)
98.0
–
98.0
–
98.0
–
–
–
–
–
–
–
–
–
8,031.7
(7.2)
(5.2)
188.6
239.8
(31.3)
384.7
3,104.2 11,520.6
–
–
–
–
–
–
–
–
–
65.1
(0.4)
–
–
–
–
19
20(a)
–
–
–
0.2
0.5
(279.3)
–
–
–
–
–
–
–
0.3
–
–
–
–
–
0.8
(279.3)
0.8
(279.3)
–
–
–
–
–
–
–
–
–
(68.4)
–
–
–
–
–
–
–
–
–
–
(22.4)
134.7
8.1
(17.1)
–
–
2,311.9
2,311.9
(0.8)
(279.4)
–
–
0.3
0.3
(6.0)
(6.0)
(6.8)
(284.8)
–
–
–
–
–
(279.4)
0.3
0.3
(6.0)
(284.8)
(6.8)
(284.8)
2,311.9
2,027.1
–
–
–
–
–
–
–
–
(68.4)
68.4
–
–
–
–
(22.4)
134.7
8.1
(17.1)
(554.2)
(554.2)
–
–
–
–
–
–
65.1
(0.4)
(22.4)
134.7
8.1
(17.1)
–
0.3
–
0.5
0.5
–
–
–
–
–
–
–
–
8,096.4
(6.7)
(4.4)
(90.7)
274.7
(38.1)
134.8
4,930.3 13,161.5
Dividends/distributions on stapled securities
19
Goodman
Balance at 1 July 2019
Total comprehensive income/(loss)
for the year
Profit for the year
Other comprehensive income/(loss)
Effect of foreign currency translation
Cash flow hedges:
– Change in value of financial instruments
Actuarial losses on defined benefit
superannuation funds, net of income tax
Total other comprehensive (loss)/income
for the year, net of income tax
Total comprehensive (loss)/income
for the year, net of income tax
Transfers
Contributions by and
distributions to owners
Purchase of securities for the LTIP
Equity settled share based
payments expense
Balance at 30 June 2020
Total comprehensive income/(loss)
for the year
Profit for the year
Other comprehensive income/(loss)
Effect of foreign currency translation
Cash flow hedges:
– Change in value of financial instruments
Decrease due to revaluation of other
financial assets
Actuarial losses on defined benefit
superannuation funds, net of income tax
Total other comprehensive income/(loss)
for the year, net of income tax
Total comprehensive income/(loss)
for the year, net of income tax
Transfers
Contributions by and
distributions to owners
Dividends/distributions on stapled securities
Issue of securities
Issue costs
Purchase of securities for the LTIP
Equity settled share based
payments expense
Deferred taxes associated with the LTIPs
Transfer to payables
Balance at 30 June 2021
The consolidated statements of changes in equity are to be read in conjunction with the accompanying notes. For an analysis of
equity attributable to non-controlling interests, refer to note 22(b).
71
Goodman Group
Consolidated statements of changes in equity
for the year ended 30 June 2021
GIT
Balance at 1 July 2019
Total comprehensive income/(loss) for the year
Profit for the year
Other comprehensive income/(loss)
Effect of foreign currency translation
Cash flow hedges:
– Change in value of financial instruments
Decrease due to revaluation of other financial assets
Total other comprehensive (loss)/income
for the year, net of income tax
Total comprehensive (loss)/income for the year
Contributions by and distributions to owners
l
a
t
i
p
a
c
d
e
u
s
s
I
Note
$M
7,477.3
Attributable to Unitholders
e
v
r
e
s
e
r
n
o
i
t
a
s
n
a
r
t
l
y
c
n
e
r
r
u
c
n
g
e
r
o
F
i
$M
n
o
i
t
a
s
n
e
p
m
o
c
e
e
y
o
p
m
E
l
e
v
r
e
s
e
r
$M
(71.1)
159.7
e
v
r
e
s
e
r
e
g
d
e
h
w
o
fl
h
s
a
C
$M
(3.3)
n
o
i
t
a
u
a
v
e
r
l
t
e
s
s
A
e
v
r
e
s
e
r
$M
12.6
–
–
–
(5.6)
(5.6)
(5.6)
–
–
–
–
–
–
–
–
–
–
–
–
(0.2)
32.7
(1.7)
–
(1.9)
(1.9)
–
–
–
–
–
32.7
32.7
–
–
–
Distributions on ordinary units
19
Issue of ordinary units under the LTIP
20(a)
146.2
Equity settled share based payments transactions
–
13.6
13.6
Balance at 30 June 2020
7,623.5
7.0
(5.2)
(38.4)
173.3
136.7
1,029.2
8,789.4
Total comprehensive income/(loss) for the year
Profit for the year
Other comprehensive (loss)/income
Effect of foreign currency translation
Cash flow hedges:
– Change in value of financial instruments
Decrease due to revaluation of other financial assets
Total other comprehensive (loss)/income
for the year, net of income tax
Total comprehensive (loss)/income for the year
Contributions by and distributions to owners
Distributions on ordinary units
19
–
–
–
–
–
–
–
Issue of ordinary units
Issue of ordinary units for the LTIP
Issue costs on ordinary units
Equity settled share based payments transactions
42.5
20(a)
183.2
(0.2)
–
–
–
–
(0.2)
0.4
(182.3)
–
(2.2)
(2.5)
(2.5)
–
–
–
–
–
0.3
–
0.7
0.7
–
–
–
–
–
–
–
(182.3)
(182.3)
–
–
–
–
–
i
s
g
n
n
r
a
e
d
e
n
a
t
e
R
i
s
e
v
r
e
s
e
r
l
a
t
o
T
l
a
t
o
T
$M
97.9
$M
$M
668.5
8,243.7
–
836.1
836.1
32.5
(1.7)
(5.6)
25.2
25.2
–
–
–
–
–
–
87.5
(1.7)
(5.6)
25.2
836.1
861.3
(475.4)
(475.4)
–
–
146.2
13.6
–
1,574.8
1,574.8
(182.2)
0.3
(2.2)
(184.1)
–
–
–
–
(182.2)
0.3
(2.2)
(184.1)
(184.1)
1,574.8
1,390.7
–
–
–
–
(443.4)
(443.4)
–
–
–
–
42.5
183.2
(0.2)
13.7
13.7
13.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 30 June 2021
7,849.0
4.5
(4.5)
(220.7)
187.0
(33.7)
2,160.6
9,975.9
The consolidated statements of changes in equity are to be read in conjunction with the accompanying notes.
72
Consolidated cash flow statements
for the year ended 30 June 2021
Annual Report 2021
Cash flows from operating activities
Property income received
Cash receipts from development activities
Other cash receipts from services provided
Property expenses paid
Payments for development activities
Other cash payments in the course of operations
Distributions received from equity investments, including Partnerships
Interest received
Finance costs paid
Net income taxes (paid)/refunded
Net cash provided by operating activities
Cash flows from investing activities
Net proceeds from disposal of investment properties
Proceeds from disposal of controlled entities, net of cash disposed
Net proceeds from disposal of equity investments
Return of capital by Partnerships
Payments for investment properties
Payments for investments in Partnerships
Payments for plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of stapled securities
Issue costs due to stapled securities
Net cash flows from/to loans with related parties
Proceeds from borrowings and derivative financial instruments
Payments on borrowings and derivative financial instruments
Dividends and distributions paid
Payments of lease liabilities
Purchase of securities to fund LTIP obligations
Net cash (used in)/provided by financing activities
Net (decrease)/increase in cash held
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations on cash held
Note
Goodman
2021
$M
2020
$M
GIT
2021
$M
2020
$M
108.3
130.2
62.1
64.3
1,560.3
1,031.4
346.4
692.1
(41.7)
(947.4)
(381.6)
536.9
9.2
(34.3)
(41.4)
(39.0)
(619.0)
(337.3)
462.2
18.1
(105.5)
(76.3)
–
–
(21.1)
–
(54.1)
381.7
8.7
–
–
(20.8)
(0.5)
(50.0)
244.0
16.4
(38.2)
(114.9)
0.5
(3.2)
21(b)
1,114.7
1,156.9
339.6
135.3
170.2
212.3
–
13.1
95.6
0.7
161.9
–
11.3
2.4
–
0.2
256.3
428.4
166.1
415.0
(192.2)
(234.3)
(17.5)
(12.9)
(790.3)
(806.6)
(464.9)
(552.0)
(7.0)
(2.5)
–
–
(549.9)
(306.4)
(143.1)
(147.3)
65.1
(0.3)
(135.0)
204.6
(891.9)
(551.4)
(17.8)
(22.4)
–
–
(9.8)
50.0
(118.0)
(546.3)
(17.7)
(19.1)
42.5
(0.2)
25.1
246.8
(891.9)
(478.2)
–
–
–
–
511.7
50.0
(0.9)
(455.7)
–
–
(1,349.1)
(660.9)
(1,055.9)
105.1
(784.3)
189.6
(859.4)
93.1
1,792.8
1,607.1
1,302.6
1,214.4
(88.1)
(3.9)
(63.4)
(4.9)
Cash and cash equivalents at the end of the year
21(a)
920.4
1,792.8
379.8
1,302.6
The consolidated cash flow statements are to be read in conjunction with the accompanying notes.
Non-cash transactions are included in note 21(c).
73
Goodman Group
Notes to the consolidated financial statements
BASIS OF PREPARATION
This section sets out the general basis upon which
Goodman and GIT have prepared their financial
statements and information that is disclosed to comply
with the Australian Accounting Standards, Corporations
Act 2001 or Corporations Regulations.
Specific accounting policies can be found in the sections
to which they relate.
1. Basis of preparation
Goodman Limited and Goodman Industrial Trust are for-profit
entities domiciled in Australia.
Statement of compliance
These consolidated financial statements are general
purpose financial statements which have been prepared in
accordance with Australian Accounting Standards adopted
by the Australian Accounting Standards Board (AASB) and
the Corporations Act 2001. International Financial Reporting
Standards (IFRS) form the basis of Australian Accounting
Standards adopted by the AASB. The consolidated financial
statements also comply with IFRS.
The consolidated financial statements are presented in
Australian dollars and were authorised for issue by the
Directors on 12 August 2021.
Basis of preparation of the consolidated financial reports
Shares in the Company, units in the Trust and CDIs over
shares in GLHK are stapled to one another and are quoted as
a single security on the ASX. Australian Accounting Standards
require an acquirer to be identified and an in-substance
acquisition to be recognised. In relation to the stapling of the
Company, the Trust and GLHK, the Company is identified
as having acquired control over the assets of the Trust and
GLHK. In the consolidated statement of financial position of
the Group, equity attributable to the Trust and the CDIs over
the shares of GLHK are presented as non-controlling interests.
As permitted by the relief provided in ASIC Instrument
20-0568, these financial statements present both the financial
statements and accompanying notes of Goodman and GIT.
GLHK, which is incorporated and domiciled in Hong Kong,
prepares its financial statements under Hong Kong Financial
Reporting Standards and the applicable requirements of
the Hong Kong Companies Ordinance and accordingly the
financial statements of GLHK have not been combined and
included as adjacent columns in this report. The financial
statements of GLHK have been included as an appendix to
this report.
The consolidated financial statements are prepared on the
historical cost basis, subject to any impairment of assets, except
that the following assets and liabilities are stated at fair value:
+
Investment properties
+ Derivative financial instruments
+
Investments in unlisted securities
+ Liabilities for cash settled share based payment arrangements.
In accordance with ASIC Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191, amounts in these
consolidated financial statements have been rounded to the
nearest hundred thousand dollars, unless otherwise stated.
Foreign currency translation
Functional and presentation currency
Items included in the consolidated financial statements of each
of the controlled entities are measured using the currency of
the primary economic environment in which the entity operates
(functional currency). The consolidated financial statements are
presented in Australian dollars, which is the Company’s and the
Trust’s functional and presentation currency.
Transactions
Foreign currency transactions are translated to each entity’s
functional currency at rates approximating to the foreign
exchange rates ruling at the dates of the transactions.
Amounts receivable and payable in foreign currencies at the
balance date are translated at the rates of exchange ruling on
that date. Resulting exchange differences are recognised in
the income statement.
Non-monetary assets and liabilities that are measured in terms
of historical cost are translated at rates of exchange applicable
at the date of the initial transaction. Non-monetary items
which are measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair
value was determined.
Translation of controlled foreign operations
The assets and liabilities of controlled foreign operations are
translated into Australian dollars at foreign exchange rates
ruling at the balance date.
Revenue and expenses are translated at weighted average
rates for the financial year. Exchange differences arising on
translation are taken directly to the foreign currency translation
reserve. On cessation of operations in a foreign region, the
cumulative exchange differences relating to the operations in
that region, that have been included in the foreign currency
translation reserve, are reclassified to the income statement.
Exchange differences arising on monetary items that form part
of the net investment in a foreign operation are recognised in
the foreign currency translation reserve on consolidation.
74
Annual Report 2021
Exchange rates used
The following exchange rates are the main exchange rates
used in translating foreign currency transactions, balances and
financial statements to Australian dollars:
Weighted average
As at 30 June
Australian dollars (AUD)
2021
2020
2021
2020
New Zealand dollars (NZD)
1.0745
1.0544
1.0739
1.0694
Hong Kong dollars (HKD)
5.7958
5.2340
5.8222
5.3402
Chinese yuan (CNY)
Japanese yen (JPY)
Euros (EUR)
4.9419
4.7200
4.8412
4.8688
79.6101
72.6051
83.2780
74.2910
0.6262
0.6071
0.6327
0.6128
British pounds sterling (GBP)
0.5546
0.5329
0.5432
0.5566
The estimates and assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year can be
found in the following notes:
+ Note 6 – Property assets
+ Note 14 – Goodwill and intangible assets
+ Note 18 – Financial risk management.
The accounting impacts of revisions to estimates are
recognised in the period in which the estimate is revised and
in any future periods affected.
Measurement of fair values
0.6890
3.7602
A number of Goodman’s accounting policies and disclosures
require the measurement of fair values, for both financial and
non-financial assets and liabilities.
United States dollars (USD)
0.7472
0.6714
0.7497
Brazilian real (BRL)
4.0236
2.9963
3.7528
Changes in accounting policies
The AASB has issued new or amendments to standards that
are first effective from 1 July 2020 but none of these have a
material impact on the Group’s financial statements.
Australian Accounting Standards issued but not yet effective
The Group has not applied any new or amended standard
that is not yet effective but available for early application in
the current accounting period. None of the new or amended
accounting standards are expected to have a significant
impact on the future results of the Group.
Critical accounting estimates used in the preparation
of the consolidated financial statements
The preparation of consolidated financial statements requires
estimates and assumptions concerning the application of
accounting policies and the future to be made by Goodman.
Estimates are continually evaluated and are based on
historical experience and other factors, including expectations
of future events that are believed to be reasonable under
the circumstances.
When measuring the fair value of an asset or a liability,
Goodman uses market observable data as far as possible.
Fair values are categorised into different levels in a fair value
hierarchy and have been defined as follows:
+
+
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities
Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices)
+
Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
Further information about the assumptions made in measuring
fair values is included in the following notes:
+ Note 6 – Property assets
+ Note 18 – Financial risk management.
75
Goodman Group
Notes to the consolidated financial statements
(continued)
RESULTS FOR THE YEAR
The notes in this section focus on the significant items in the
income statement, and include the profit per security, analysis
of the results by operating segment and taxation details.
2. Profit before income tax
Gross property income
Gross property income comprises rental income under
operating leases (net of incentives provided) and amounts
billed to customers for outgoings (e.g. rates, levies, cleaning,
security, etc). Amounts billed to customers for outgoings
are a cost recovery for Goodman and are recognised once
the expense has been incurred. The expense is included in
property expenses.
Rental income under operating leases is recognised on a
straight-line basis over the term of the lease contract. Where
operating lease rental income is recognised relating to fixed
increases in rentals in future years, an asset is recognised.
This asset is a component of the relevant investment property
carrying amount. The cost of lease incentives provided to
customers is amortised on a straight-line basis over the life of
the lease as a reduction of gross property income.
Management and development income
The revenue from management and development activities is
measured based on the consideration specified in a contract
with a customer. Goodman recognises revenue when it
transfers control over a product or service to a customer.
Management income
Fee income derived from management services relates to
investment management base fees and property services fees
and is recognised and invoiced progressively as the services
are provided. Customers make payments usually either
monthly or quarterly in arrears.
Performance related management income generally relates
to portfolio performance fee income, which is recognised
progressively as the services are provided but only when the
income can be reliably measured and is highly probable of not
being reversed. These portfolio performance fees are typically
dependent on the overall returns of a Partnership relative to
an agreed benchmark return, assessed over the life of the
Partnership, which can vary from one year to seven years. The
returns are impacted by operational factors such as the quality
and location of the portfolio, active property management,
rental income rates and development activity but can also be
significantly affected by changes in global and local economic
conditions. Accordingly, portfolio performance fee revenue is
only recognised towards the end of the relevant assessment
period, as prior to this revenue recognition is not considered to
be sufficiently certain.
In determining the amount of revenue that can be reliably
measured, management prepares a sensitivity analysis to
understand the impact of changes in asset valuations on
the potential performance fee at the assessment date. The
assessment of revenue will depend on the prevailing market
conditions at the reporting date relative to long-term averages
and also the length of time until the assessment date; e.g.
the longer the time period to assessment date, the greater
the impact of the sensitivity analysis. The potential portfolio
performance fee revenue is then recognised based on the
length of time from the start of the assessment period to the
reporting date as a proportion of the total assessment period.
Where the income is attributable to development activities
or it relates to a combination of inextricable management
and development activities that have occurred over the
performance fee period, then it is reported as development
income; otherwise, the income is reported as management
income. The Partnerships make payments in respect of portfolio
performances fees at the end of the performance periods once
the attainment of the conditions has been verified and the
amount of the fee has been agreed by all parties.
76
Annual Report 2021
Development income – disposal of inventories
Net gain on disposal of investment properties
The disposal of inventories is recognised at the point in time
when control over the property asset is transferred to the
customer. This will generally occur on transfer of legal title and
payment in full by the customer. The gain or loss on disposal
of inventories is calculated as the difference between the
carrying amount of the asset at the time of disposal and the
proceeds on disposal (less transaction costs) and is included
in the income statement in the period of disposal.
Development income – development management services
Fee income from development management services
(including master-planning, development management and
overall project management) is recognised progressively
as the services are provided in proportion to the stage of
completion by reference to costs. Payments are received in
accordance with the achievement of agreed milestones over
the development period. The development period can be up to
24 months for larger, more complex projects.
Performance related development income includes income
associated with the returns from individual developments
under the Group’s management and performance fee income
that relates to development activity. Income in respect of
individual developments is recognised by Goodman on
attainment of the performance related conditions, which
is when the income can be reliably measured and is highly
probable of not being reversed. These amounts are paid by
the Partnership when the amounts have been measured and
agreed. Income associated with development activities as part
of a portfolio assessment is recognised on the same basis as
outlined above in the management income section.
Development income – fixed price development contracts
Certain development activities are assessed as being fixed
price development contracts. This occurs when a signed
contract exists, either prior to the commencement of or during
the development phase, to acquire a development asset from
Goodman on completion. Revenue and expenses relating to
these development contracts are recognised in the income
statement in proportion to the stage of completion of the
relevant contracts by reference to costs. The payments may
be on completion of the development once legal title has been
transferred. The development period can be up to 24 months
for larger, more complex projects.
The disposal of an investment property is recognised at
the point in time when control over the property has been
transferred to the purchaser.
Employee expenses
Wages, salaries and annual leave
Wages and salaries, including non-monetary benefits, and
annual leave that are expected to be settled within 12 months
of the balance date represent present obligations resulting
from employees’ services provided to the balance date. These
are calculated at undiscounted amounts based on rates that
are expected to be paid as at balance date including related
on-costs, such as insurances and payroll tax.
Bonuses
A liability is recognised in other payables and accruals for
bonuses where there is a contractual obligation or where there
is a past practice that has created a constructive obligation.
Liabilities for bonuses are measured at the amounts expected
to be paid, including related on-costs, when they are settled.
Superannuation
Defined contribution funds
Obligations for contributions to defined contribution funds are
recognised as an expense as incurred.
Defined benefit retirement schemes
The net obligation in respect of defined benefit retirement
schemes is recognised in the statement of financial position
and is calculated separately for each plan by estimating
the amount of future benefit that employees have earned in
the current and prior periods, discounting that amount and
deducting the fair value of any plan assets. The calculation
of defined benefit obligations is performed annually by a
qualified actuary using the projected unit credit method.
Remeasurements of the net defined benefit liability, which
comprise actuarial gains and losses and the return on plan
assets (excluding interest), are recognised immediately in
other comprehensive income. Net interest expense and other
expenses related to defined benefit retirement schemes are
recognised in the income statement.
77
Goodman Group
Notes to the consolidated financial statements
Results for the year (continued)
Profit before income tax has been arrived at after crediting/(charging) the following items:
Gross property income
Rental income
Recovery of property outgoings
Gross property income
Management activities
Management services
Performance related income
Management income
Development activities
Income from disposal of inventories
Income from fixed price development contracts
Other development income, including development management1
Net gain on disposal of assets held for sale
Net gain on disposal of special purpose development entities
Development income
Inventory cost of sales
Other development expenses
Development expenses
Disposal of equity investments
Goodman
GIT
2021
$M
2020
$M
2021
$M
2020
$M
93.0
19.4
94.6
21.3
112.4
115.9
45.9
14.3
60.2
53.6
14.3
67.9
310.1
73.8
383.9
890.5
195.0
274.2
132.3
–
304.0
207.2
511.2
461.8
82.8
309.5
–
28.5
1,492.0
882.6
(686.8)
(329.8)
(175.5)
(113.6)
(862.3)
(443.4)
–
–
–
–
–
–
–
–
–
(2.3)
–
(2.3)
11.3
(8.1)
3.2
–
–
–
–
–
–
–
–
–
–
–
–
0.3
–
–
–
–
0.3
(1.0)
–
(1.0)
0.1
–
0.1
–
–
–
–
–
–
–
–
–
–
–
Net consideration from disposal of associates and JVs
Carrying value of associates and JVs disposed
Net gain on disposal of equity investments
6(f)
17.0
(12.0)
5.0
7.7
(7.1)
0.6
Employee expenses
Wages, salaries and on-costs
Annual and long service leave
Superannuation costs
Employee expenses
Share based payments expense
Equity settled share based payments expense
Cash settled share based payments expense
Other share based payments related costs
Share based payments expense
Amortisation and depreciation
Impairment losses
(203.4)
(195.2)
(1.4)
(6.0)
(1.9)
(6.6)
(210.8)
(203.7)
(134.7)
(105.4)
(28.7)
(98.0)
(41.2)
(24.8)
(268.8)
(164.0)
(23.0)
(22.5)
Reversal of previous impairment on loans to related parties
Impairment losses
–
–
–
–
17.6
17.6
Fee revenues from single contractual arrangements involving a combination of inextricable Investment Management and Development Management services and
recognised over the life of the underlying development projects are classified as development income for statutory reporting purposes. During the year, $75.2 million
(FY20: $nil) of such income was recognised.
1.
78
Annual Report 2021
3. Profit per security
Basic profit per security of the Group is calculated by dividing the profit attributable to the Securityholders by the weighted
average number of securities outstanding during the year. Diluted profit per security is determined by adjusting the profit
attributable to the Securityholders and weighted average number of securities outstanding for all dilutive potential securities,
which comprise performance rights issued under the LTIP.
Goodman
Profit per security
Basic profit per security
Diluted profit per security
2021
¢
125.4
122.1
2020
¢
82.4
80.0
Profit after tax of $2,311.9 million (2020: $1,504.1 million) was used in calculating basic and diluted profit per security.
Weighted average number of securities used in calculating basic and diluted profit per security:
2021
2020
Number of securities
Weighted average number of securities used in calculating basic profit per security
1,844,221,829
1,826,031,065
Effect of performance rights on issue
48,908,249
54,173,117
Weighted average number of securities used in calculating diluted profit per security
1,893,130,078
1,880,204,182
The calculation of profit per security is not required for GIT.
Goodman Limited
Under Australian Accounting Standards, the issued units of the Trust and the CDIs over the shares of GLHK are presented as
non-controlling interests. As a consequence, the Directors are required to present a profit per share and a diluted profit per share
based on Goodman Limited’s consolidated result after tax but excluding the results attributable to the Trust and GLHK.
Profit per Goodman Limited share
Basic profit per Goodman Limited share
Diluted profit per Goodman Limited share
2021
¢
16.3
15.9
2020
¢
17.3
16.8
Profit after tax of $300.2 million (2020: $315.9 million) was used in calculating basic and diluted profit per Goodman Limited share.
4. Segment reporting
An operating segment is a component of Goodman that engages in business activities from which it may earn revenues and incur
expenses. Goodman reports the results and financial position of its operating segments based on the internal reports regularly
reviewed by the Group Chief Executive Officer in order to assess each segment’s performance and to allocate resources to them.
Operating segment information is reported on a geographic basis and Goodman has determined that its operating segments are
Australia and New Zealand (reported on a combined basis), Asia (Greater China and Japan), Continental Europe (primarily Germany
and France), the United Kingdom and the Americas (North America and Brazil).
The activities and services undertaken by the operating segments include:
+
+
+
Property investment, through both direct ownership and cornerstone investments in Partnerships
Management activities, both investment and property management
Development activities, including development of directly owned assets (predominantly disclosed as inventories) and management
of development activities for Partnerships.
The segment results that are reported to the Group Chief Executive Officer are based on profit before net finance expense and income
tax expense, and also exclude non-cash items such as fair value adjustments and impairments, corporate expenses and incentive based
remuneration. The assets allocated to each operating segment are the property assets, including the investments in Partnerships and
trade and other receivables associated with the operating activities, but exclude inter-entity funding, income tax receivables and corporate
assets. The liabilities allocated to each operating segment primarily relate to trade and other payables associated with the operating
activities, but exclude interest bearing liabilities, derivative financial instruments, provisions for distributions and corporate liabilities.
79
Goodman Group
Notes to the consolidated financial statements
Results for the year (continued)
4 Segment reporting (continued)
The accounting policies used to report segment information are the same as those used to prepare the consolidated financial
statements of Goodman and GIT.
For the purpose of operating segment reporting, there are no material intersegment revenues and costs. Information regarding
the operations of each reportable segment is included on the following pages.
Information about reportable segments
Goodman
Income statement
External revenues
Australia and
New Zealand
Asia
Continental
Europe
United
Kingdom
Americas
Total
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
Gross property income
95.8
105.6
6.5
0.1
8.5
–
Management income
Development income
147.0
159.6 110.2
246.2
107.4
88.0
223.6
99.6
164.8
193.8
796.5
511.3
245.3
19.0
1.0
3.3
9.7
2.3
0.6
16.0
61.8
0.5
112.4
115.9
15.1
383.9
511.2
58.9 1,492.0
882.6
Distributions from investments
–
–
–
–
–
1.2
–
–
–
–
–
1.2
Total external revenues
466.4
364.8
281.5
440.1
912.4
600.5
249.6
31.0
78.4
74.5 1,988.3 1,510.9
Analysis of external revenues
Revenue from contracts
with customers
Assets and services
transferred at a point in time
Assets and services
transferred over time
Other revenue
Rental income (excludes
outgoings recoveries)
106.3
11.5
17.2
18.6
730.5
494.4
228.7
4.5
–
– 1,082.7
529.0
282.6
266.1
260.4
421.5
174.2
104.9
20.0
17.0
77.8
74.0
815.0
883.5
Distributions from investments
–
–
–
77.5
87.2
3.9
–
–
7.7
–
–
1.2
0.9
–
9.5
–
0.6
0.5
90.6
97.2
–
–
–
1.2
Total external revenues
466.4
364.8
281.5
440.1
912.4
600.5
249.6
31.0
78.4
74.5 1,988.3 1,510.9
Reportable segment
profit before tax
Share of net results of equity
accounted investments
467.4
435.8
324.5
477.7
458.8
282.3
31.8
20.9
128.9
102.5 1,411.4 1,319.2
853.0
384.7
273.2
394.3
165.7
98.3
32.9
14.8
384.1
130.1 1,708.9 1,022.2
Material non-cash items not included
in reportable segment profit before tax
Net gain from fair value adjustments
on investment properties
63.1
46.4
–
–
–
–
–
(1.2)
–
–
63.1
45.2
Statement of financial position
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
Reportable segment assets
6,619.9 5,854.1 3,565.7 3,345.3 2,382.2 2,310.2
840.6
891.8 2,475.9 2,122.8 15,884.3 14,524.2
Non-current assets
6,314.6 5,445.6 3,261.8 2,938.3 2,126.5 1,870.6
761.8
591.2 2,335.8 2,017.3 14,800.5 12,829.3
Included in reportable
segment assets are:
Investment properties
1,687.3 1,894.0
137.7
–
–
–
26.2
7.2
–
– 1,851.5 1,901.2
Investments accounted for
using the equity method
4,251.0 3,451.5 2,808.8 2,732.8
865.2
898.9
408.0
281.0 2,327.0 2,006.6 10,660.0 9,370.8
Reportable segment liabilities
113.9
137.1
242.4
205.9
111.0
101.6
80.4
77.9
156.2
109.5
703.9
632.0
80
Annual Report 2021
Australia and
New Zealand
Asia
Continental
Europe
Americas
Total
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
60.2
–
–
67.9
0.3
–
60.2
68.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9.1
9.1
–
–
–
9.1
9.1
–
–
9.9
9.9
–
–
–
9.9
9.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
60.2
67.9
–
9.1
0.3
9.9
69.3
78.1
–
0.3
14.3
14.3
45.9
53.6
9.1
9.9
69.3
78.1
GIT
Income statement
External revenues
Gross property income
Development income
Distributions from investments
Total external revenues
Analysis of external revenues
Revenue from contracts with customers
Assets and services transferred at a point in time
–
0.3
Assets and services transferred over time
14.3
14.3
Other revenue
Rental income (excludes outgoings recoveries)
45.9
53.6
Distributions from investments
Total external revenues
–
–
60.2
68.2
Reportable segment profit before tax
240.2
180.9
33.0
34.3
69.2
64.9
73.9
70.8
416.3
350.9
Share of net results of equity accounted investments
726.2
332.2
137.3
284.7
140.0
83.2
370.3
125.4 1,373.8
825.5
Material non-cash items not included
in reportable segment profit before tax
Net gain from fair value adjustments
on investment properties
Statement of financial position
60.2
36.5
–
2021
$M
2020
$M
2021
$M
–
2020
$M
–
2021
$M
–
2020
$M
–
2021
$M
–
2020
$M
60.2
2021
$M
36.5
2020
$M
Reportable segment assets
4,947.0 4,405.5 1,522.5 1,510.6
732.9
779.1 2,268.1 1,953.8 9,470.5 8,649.0
Non-current assets
4,939.3 4,153.2 1,522.5 1,510.6
727.9
778.1 2,243.2 1,934.5 9,432.9 8,376.4
Included in reportable segment assets are:
Investment properties
1,155.7 1,202.4
–
–
–
–
–
–
1,155.7 1,202.4
Investments accounted for using the equity method
3,601.7 2,944.8 1,522.5 1,510.6
711.0
758.4 2,243.2 1,934.5 8,078.4 7,148.3
Reportable segment liabilities
44.6
91.3
–
–
0.6
–
124.1
82.3
169.3
173.6
81
Goodman Group
Notes to the consolidated financial statements
Results for the year (continued)
4 Segment reporting (continued)
Reconciliation of reportable segment revenues, profit or loss, assets and liabilities
Valuation and other items not included in reportable segment profit before tax:
– Net gain from fair value adjustments on investment properties
–
Share of fair value adjustments attributable to investment properties in Partnerships
– Reversal of previous impairment on loans to related parties
–
–
–
Share of fair value adjustments on derivative financial instruments in Partnerships
Share based payments expense
Straight lining of rental income and tax deferred adjustments
6(e)
6(f)
6(f)
2
Revenues
Total revenue for reportable segments
Consolidated revenues
Profit or loss
Total profit before tax for reportable segments
Property investment earnings
Management earnings
Development earnings1
Operating expenses allocated to reportable segments
Reportable segment profit before tax
Corporate expenses not allocated to reportable segments
Profit before interest and tax
Net finance (expense)1
Consolidated profit before income tax
Assets
Assets for reportable segments
Cash
Other unallocated amounts2
Consolidated total assets
Liabilities
Liabilities for reportable segments
Interest bearing liabilities
Provisions for dividends/distributions to Securityholders
Other unallocated amounts2
Consolidated total liabilities
Note
Goodman
2021
$M
2020
$M
GIT
2021
$M
2020
$M
1,988.3
1,510.9
1,988.3
1,510.9
69.3
69.3
78.1
78.1
411.5
459.1
717.9
(177.1)
425.2
511.2
575.7
(192.9)
1,411.4
1,319.2
(116.9)
(99.4)
1,294.5
1,219.8
63.1
1,295.8
–
(28.9)
45.2
591.7
–
16.2
(268.8)
(164.0)
(3.2)
(11.6)
2,352.5
1,697.3
15
67.5
(80.2)
2,420.0
1,617.1
416.3
350.9
–
–
–
416.3
(51.7)
364.6
60.2
1,072.1
17.6
(28.3)
–
2.6
1,488.8
135.5
1,624.3
–
–
–
350.9
(53.6)
297.3
36.5
536.0
–
15.0
–
(13.5)
871.3
(24.1)
847.2
15,884.3
14,524.2
9,470.5
8,649.0
514.6
1,042.9
349.6
1,039.5
468.1
571.1
3,475.2
3,563.6
16,867.0
16,138.2
13,295.3
13,252.1
703.9
632.0
169.3
173.6
2,060.3
2,938.5
2,062.8
2,939.5
11
277.1
664.2
274.3
772.8
166.3
921.0
201.1
1,148.5
3,705.5
4,617.6
3,319.4
4,462.7
1.
2.
Development earnings include $7.4 million (2020: $nil) of interest income from a loan to a development JV. The interest income is reported under finance income in note 15.
Other unallocated amounts in Goodman and GIT included other financial assets and liabilities, deferred tax assets, tax payables and provisions which did not relate
to the reportable segments. Additionally, other unallocated assets and liabilities in GIT included loans due from/to controlled entities of Goodman.
82
Annual Report 2021
5. Taxation
Income tax for the period comprises current tax and movements in deferred tax assets and liabilities. Current tax and
movements in deferred tax assets and liabilities are recognised in the income statement except to the extent that they relate to
items recognised directly in equity, in which case the relevant amounts of tax are recognised directly in equity.
Current tax is the expected tax payable on the taxable income for the financial year and any adjustment to tax payable in
respect of previous financial years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. The following temporary differences are not accounted for:
+
+
+
Goodwill
The initial recognition of assets or liabilities that affect neither accounting nor taxable profit
Differences relating to investments in controlled entities to the extent that they will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount
of assets and liabilities. Deferred tax assets or liabilities in respect of investment properties held at fair value are calculated
on the presumption that the carrying amount of the investment property will be recovered through sale. A deferred tax asset
is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be
utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Additional income taxes that arise from dividends/distributions are recognised at the same time as the liability to pay the related
dividends/distributions.
(a) Amounts recognised in the income statement
Current tax expense recognised in the income statement
Current year
Adjustment for current tax in prior periods
Current tax expense
Deferred tax expense recognised in the income statement
Origination and reversal of temporary differences
Deferred tax expense
Total income tax expense recognised in the income statement1
Goodman
2021
$M
(66.3)
8.5
(57.8)
(50.3)
(50.3)
(108.1)
2020
$M
(128.5)
5.5
(123.0)
10.0
10.0
(113.0)
GIT
2021
$M
(0.9)
–
(0.9)
(48.6)
(48.6)
(49.5)
1. Goodman’s total income tax expense includes deferred taxes of $50.4 million (2020: $15.6 million) on fair value adjustments on investment properties.
(b) Amounts recognised in equity
Deferred tax benefit/(expense) recognised in equity
LTIP
Defined benefit superannuation funds
Total income tax benefit/(expense) recognised in equity
Goodman
2021
$M
8.1
(4.7)
3.4
2020
$M
(8.0)
–
(8.0)
(19.1)
(19.1)
(11.1)
2020
$M
–
(4.9)
(4.9)
83
Goodman Group
Notes to the consolidated financial statements
Results for the year (continued)
5 Taxation (continued)
(c) Reconciliation of income tax expense to profit before income tax
Profit before income tax
Prima facie income tax expense calculated at 30% (2020: 30%) on the profit before income tax
Decrease/(increase) in income tax due to:
–
Profit attributable to GIT Unitholders
– Current year losses for which no deferred tax asset was recognised
– Other non-assessable/(deductible) items, net
– Utilisation of previously unrecognised tax losses
– Difference in overseas tax rates
–
–
Adjustment for current tax in prior periods
Taxes on partnership income
– Other items
Income tax expense
GIT
Goodman
2021
$M
2,420.0
(726.0)
483.5
(34.3)
135.7
68.9
11.2
8.5
(62.8)
7.2
2020
$M
1,617.1
(485.1)
252.6
(3.4)
101.3
39.5
5.5
5.5
(25.8)
(3.1)
(108.1)
(113.0)
The income tax expense recorded by GIT relates to withholding taxes on actual distributions and deferred taxes on potential
future distributions from Partnerships.
Goodman
2021
$M
2020
$M
(131.8)
(85.0)
41.4
(57.8)
4.2
(144.0)
16.1
(160.1)
(144.0)
76.3
(123.0)
(0.1)
(131.8)
9.0
(140.8)
(131.8)
(d) Current tax receivable/payable
Net income tax payable
Net income tax payable at the beginning of the year
Decrease/(increase) in current tax payable due to:
– Net income taxes paid
– Current tax expense
– Other
Net income tax payable at the end of the year
Current tax receivables (refer to note 7)
Current tax payables
84
Annual Report 2021
(e) Deferred tax assets and liabilities
Deferred tax assets/(liabilities) are attributable to the following:
Goodman
Deferred tax assets
Deferred tax liabilities
Investment properties
Receivables
Tax losses
Payables
Provisions
Other items
Tax assets/(liabilities)
Set off of tax
Net tax assets/(liabilities)
2021
$M
–
–
27.3
11.5
4.4
1.5
44.7
(24.8)
19.9
2020
$M
–
–
–
11.3
10.1
–
21.4
(10.9)
10.5
2021
$M
(182.0)
(9.3)
–
–
–
(1.9)
(193.2)
24.8
(168.4)
2020
$M
(119.4)
(3.4)
–
–
–
(9.9)
(132.7)
10.9
(121.8)
Deferred tax assets of $323.3 million (2020: $219.9 million) arising primarily from tax losses and deductions associated with the
LTIPs have not been recognised by Goodman.
GIT
At 30 June 2021, deferred tax liabilities of $124.0 million (2020: $82.3 million) have been recognised in relation to potential future
distributions from Partnerships.
(f) Taxation of GIT
Under current Australian income tax legislation, the Trust is not liable for income tax, including capital gains tax, provided that
Securityholders are presently entitled to the distributable income of the Trust as calculated for trust law purposes. The controlled
entities of the Trust that operate in certain foreign jurisdictions are liable to pay tax in those jurisdictions.
85
Goodman Group
Notes to the consolidated financial statements
Results for the year (continued)
OPERATING ASSETS AND LIABILITIES
Components of investment properties
The notes in this section focus on Goodman’s property
assets, working capital and goodwill and intangible assets.
6. Property assets
(a) Principles and policies
Investment in property assets includes both inventories and
investment properties (including those under development),
which may be held either directly or through investments in
Partnerships (both associates and JVs).
Inventories
Inventories relate to land and property developments that
are held for sale or development and sale in the normal
course of the Group’s business. Inventories are carried at the
lower of cost or net realisable value. The calculation of net
realisable value requires estimates and assumptions which
are regularly evaluated and are based on historical experience
and expectations of future events that are believed to be
reasonable under the circumstances.
Inventories are classified as non-current assets unless they are
contracted to be sold within 12 months of the end of the reporting
period, in which case they are classified as current assets.
Investment properties
Investment properties comprise investment interests in land
and buildings held for the purpose of leasing to produce rental
income and/or for capital appreciation. Investment properties
are carried at fair value. The calculation of fair value requires
estimates and assumptions which are continually evaluated
and are based on historical experience and expectations of
future events that are believed to be reasonable under the
circumstances. Investment properties are not depreciated
as they are subject to continual maintenance and regularly
revalued on the basis described below. Changes in the fair
value of investment properties are recognised directly in the
income statement.
Land and buildings (including integral plant and equipment)
comprising investment properties are regarded as composite
assets and are disclosed as such in the consolidated
financial report.
Investment property carrying values include the costs of
acquiring the assets and subsequent costs of development,
including costs of all labour and materials used in
construction, costs of managing the projects, holding costs
and borrowing costs incurred during the development periods.
Amounts provided to customers as lease incentives and
assets relating to fixed rental income increases in operating
lease contracts are included within investment property
values. Lease incentives are amortised over the term of the
lease on a straight-line basis. Direct expenditure associated
with leasing a property is also capitalised within investment
property values and amortised over the term of the lease.
Classification of investment properties
Investment properties are classified as either properties under
development or stabilised properties. Investment properties
under development include land, new investment properties
in the course of construction and investment properties that
are being redeveloped. Stabilised investment properties
are all investment properties not classed as being under
development and would be completed properties that are
leased or are available for lease to customers.
For investment properties under development, the carrying
values are reviewed by management at each reporting date to
consider whether they reflect the fair value and at completion
external valuations are obtained to determine the fair values.
For stabilised investment properties, independent valuations
are obtained at least every three years to determine the fair
values. At each reporting date between obtaining independent
valuations, the carrying values are reviewed by management
to ensure they reflect the fair values.
Deposits for investment properties
Deposits and other costs associated with acquiring investment
properties that are incurred prior to obtaining legal title
are recorded at cost and disclosed as other assets in the
statement of financial position.
86
(b) Summary of investment in property assets
Inventories
Current
Non-current
Assets held for sale
Investment property
Investment properties
Stabilised investment properties
Investment properties under development
Investments accounted for using the equity method
Associates
JVs
Total property assets
Annual Report 2021
Goodman
GIT
Note
2021
$M
2020
$M
2021
$M
2020
$M
6(d)
6(d)
235.1
1,192.7
544.1
636.1
1,427.8
1,180.2
–
5.9
5.9
–
5.9
5.9
41.5
–
–
–
1,791.1
1,797.9
1,093.4
1,192.4
60.1
103.3
62.3
10.0
6(e)
1,851.2
1,901.2
1,155.7
1,202.4
6(f)(i)
6(f)(ii)
6,302.6
5,617.2
5,292.9
4,761.4
4,357.4
3,753.6
2,785.5
2,386.9
10,660.0
9,370.8
8,078.4
7,148.3
13,980.5
12,452.2
9,240.0
8,356.6
(c) Estimates and assumptions in determining property carrying values
Inventories
For both inventories held directly and inventories held in Partnerships, external valuations are not performed but instead valuations
are determined using the feasibility studies supporting the land and property developments. The end values of the developments in
the feasibility studies are based on assumptions such as capitalisation rates, letting up periods and incentives that are consistent
with those observed in the relevant market. If the feasibility study calculations indicate that the forecast cost of a completed
development will exceed the net realisable value, then the inventories are impaired.
Investment properties
Stabilised investment properties
The fair value of stabilised investment properties is based on current prices in an active market for similar properties in the same
location and condition and subject to similar lease and other contracts. The current price is the estimated amount for which a
property could be exchanged between a willing buyer and a willing seller in an arm’s length transaction after proper marketing
wherein the parties had each acted knowledgably, prudently and without compulsion.
Approach to determination of fair value
The approach to determination of fair value of investment properties is applied to both investment properties held directly and
investment properties held in Partnerships.
Valuations are determined based on assessments and estimates of uncertain future events, including upturns and downturns
in property markets and availability of similar properties, vacancy rates, market rents and capitalisation and discount rates.
Recent and relevant sales evidence and other market data are taken into account. Valuations are either based on an external
independent valuation or on an internal valuation.
External valuations are undertaken only where market segments were observed to be active. In making the determination of
whether a market segment is active, the following characteristics are considered:
+
+
+
+
Function of the asset (distribution/warehouse or suburban office)
Location of asset (city, suburb or regional area)
Carrying value of the asset (categorised by likely appeal to private (including syndicates), national and institutional investors)
Categorisation as primary or secondary based on a combination of location, weighted average lease expiry, quality of tenant
covenant (internal assessment based on available market evidence) and age of construction.
Each property asset is assessed and grouped with assets in the same or similar market segments. Information on all relevant recent
sales is also analysed using the same criteria to provide a comparative set. Unless three or more sales are observed in an individual
market segment (taken together with any comparable market segments as necessary), that market segment is considered inactive.
87
Goodman Group
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
6 Property assets (continued)
During the current financial year, the fair values of 59%
(2020: 59%) of stabilised investment properties held directly
by Goodman were determined based on a valuation by an
independent valuer who held a recognised and relevant
professional qualification and had recent experience in the
location and category of the investment property being valued.
The equivalent percentage for GIT was 78% (2020: 42%).
For investments in Partnerships, all properties that were
stabilised investment properties throughout FY21 were valued
by an independent valuer during the year.
Sensitivity analysis
The fair value measurement approach for directly held
investment properties has been categorised as a Level 3 fair
value based on the inputs to the valuation method used (see
note 1). The stabilised investment property valuations at 30
June 2021 are most sensitive to the following inputs:
+
+
+
Capitalisation rates
Market rents
Level of incentives provided to customers
and/or the amount of vacant time on expiry of a lease.
The majority of directly held stabilised investment properties
are in Australia and the average capitalisation rate and the
range of market rents are summarised in the table below:
Valuation
technique
Significant unobservable inputs
2021
2020
Income
capitalisation
Range of net market rents
(per square metre per annum)
$90 to
$450
$44 to
$320
Capitalisation rate (weighted average)
4.4% 5.2%
Where a market segment is observed to be active, then
external independent valuations are performed for stabilised
investment properties where there has been more than a 25
basis point movement in capitalisation rates and/or there has
been a material change in tenancy profile (including changes
in the creditworthiness of a significant customer that may have
a material impact on the property valuation), and/or there has
been significant capital expenditure, and/or there has been
a change in use (or zoning) of the asset and/or it has been
three years since the previous external independent valuation.
For all other stabilised investment properties in an active
market segment, an internal valuation is performed based on
observable capitalisation rates and referenced to independent
market data.
Where a market segment is observed to be inactive, then no
external independent valuations are performed and internal
valuations are undertaken based on discounted cash flow
(DCF) calculations. The DCF calculations are prepared over a
10 year period. The key inputs considered for each individual
calculation are rental growth rates, discount rates, market
rental rates and letting up incentives. Discount rates are
computed using the 10 year bond rate or equivalent in each
jurisdiction plus increments to reflect country risk, tenant
credit risk and industry risk. Where possible, the components
of the discount rate are benchmarked to available market data.
Market assessment
The investment market for industrial, logistics and warehousing
properties has been strong during FY21. At 30 June 2021,
the Board has been able to assess that all markets in which
the Group operated were active and as a consequence no
adjustments have been made to the carrying values of the
Group’s stabilised investment property portfolios on the basis
of internally prepared discounted cash flow valuations.
The overall weighted average capitalisation rates for the
divisional portfolios (including Partnerships) are as set out in
the table below:
Total portfolio weighted average capitalisation rate
Division
Australia and
New Zealand
Asia
Continental
Europe
United Kingdom
Americas
Goodman
2021
%
4.4
4.4
3.8
4.1
4.0
2020
%
5.1
4.7
4.9
4.5
4.4
GIT
2021
%
4.4
3.9
3.9
–
4.0
2020
%
5.1
4.2
5.0
–
4.4
88
Annual Report 2021
The impacts on the Group’s financial position that would arise from the changes in capitalisation rates, market rents and
incentives/voids are set out in the table below. This illustrates the impacts on Goodman in respect of both the directly held
stabilised investment properties and its share of those stabilised investment properties held by Partnerships.
Book value at 30 June 2021
1,791.1
11,316.8
1,093.4
7,091.4
Goodman
GIT
Directly held
properties
$M
Partnerships1
$M
Directly held
properties
$M
Partnerships1
$M
Changes in capitalisation rates:
Increase in cap rates +50bps
Increase in cap rates +25bps
Decrease in cap rates -25bps
Decrease in cap rates -50bps
Changes in market rents:
Decrease in rents -10%
Decrease in rents -5%
Increase in rents +5%
Increase in rents +10%
Changes in voids/incentives2:
Increase in voids/ incentives +3 months
Increase in voids/ incentives +6 months
(170.8)
(89.7)
99.7
211.2
(86.3)
(43.2)
43.2
86.3
(6.4)
(12.8)
(1,195.8)
(631.5)
711.6
1,519.7
(510.4)
(255.2)
255.5
510.4
(30.2)
(60.3)
(107.6)
(56.6)
63.2
134.1
(50.1)
(25.1)
25.1
50.1
(4.4)
(8.8)
(759.9)
(401.5)
452.9
967.9
(319.4)
(159.7)
159.7
319.4
(16.3)
(32.6)
1. Goodman’s share of stabilised investment properties held by Partnerships.
2. On assumed lease expiries over the next 12 months.
Investment properties under development
External valuations are generally not performed for investment properties under development, but instead valuations are
determined using the feasibility studies supporting the developments. The end values of the developments in the feasibility studies
are based on assumptions such as capitalisation rates, letting up periods and incentives that are consistent with those observed
in the relevant market adjusted for a profit and risk factor. This profit and risk factor is dependent on the function, location, size
and current status of the development and is generally in a market range of 10% to 15%; although for larger more complex
projects that are at an early stage of the development, the profit and risk factor could be up to 25%. This adjusted end value is
then compared to the forecast cost of a completed development to determine whether there is an increase or decrease in value.
This practice of determining fair value by reference to the development feasibility is generally also applied for Goodman’s
investments in Partnerships. However, certain Partnerships do obtain independent valuations for investment properties under
development each financial year.
89
Goodman Group
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
6 Property assets (continued)
(d) Inventories
Current
Land and development properties
Non-current
Land and development properties
Goodman
Goodman
2021
$M
235.1
235.1
1,192.7
1,192.7
2020
$M
544.1
544.1
636.1
636.1
GIT
2021
$M
–
–
5.9
5.9
2020
$M
–
–
5.9
5.9
During the current and prior financial years no impairment losses were recognised on land and development properties.
During the financial year, borrowing costs of $3.8 million (2020: $6.7 million) previously capitalised into the carrying value of
inventories were expensed to the income statement on disposal of the inventories.
(e) Investment properties
Reconciliation of carrying amount of directly held investment properties
Carrying amount at the beginning of the year
Acquisitions
Capital expenditure
Carrying value of properties disposed
Transfers to assets held for sale
Transfers to inventories
Net gain from fair value adjustments
Effect of foreign currency translation
Goodman
GIT
2021
$M
1,901.2
163.0
24.8
(127.8)
(41.5)
(131.5)
63.1
(0.1)
2020
$M
1,897.1
–
123.4
(165.2)
–
–
45.2
0.7
2021
$M
1,202.4
–
22.0
(128.9)
–
–
60.2
–
2020
$M
1,158.6
–
8.5
(1.0)
–
–
36.5
(0.2)
Carrying amount at the end of the year
1,851.2
1,901.2
1,155.7
1,202.4
Analysed by segment:
Australia and New Zealand
Asia
United Kingdom
1,687.3
137.7
26.2
1,894.0
1,155.7
1,202.4
–
7.2
–
–
–
–
1,851.2
1,901.2
1,155.7
1,202.4
90
Annual Report 2021
Goodman
During the financial year, borrowing costs of $nil (2020: $1.8 million) previously capitalised into the carrying value of investment
properties were expensed to the income statement on disposal of the investment properties.
Non-cancellable operating lease commitments receivable from investment property customers
The analysis in the table below reflects the gross property income, excluding recoverable outgoings, based on existing lease
agreements. It assumes that leases will not extend beyond the next review date, where the customer has an option to end the lease.
Non-cancellable operating lease commitments receivable:
Less than one year
One to two years
Two to three years
Three to four years
Four to five years
More than five years
Goodman
2021
$M
80.7
63.9
49.4
38.4
30.1
120.4
382.9
2020
$M
85.8
71.4
54.3
44.7
33.3
190.3
479.8
GIT
2021
$M
45.8
37.0
28.6
21.1
16.8
36.9
2020
$M
47.0
39.3
27.6
20.3
14.4
29.1
186.2
177.7
(f) Investments accounted for using the equity method
Investments accounted for using the equity method comprise associates and JVs, which are collectively referred to as Partnerships.
Associates
An associate is an entity in which Goodman exercises significant influence but not control over its financial and operating
policies. In the consolidated financial statements, investments in associates are accounted for using the equity method.
Investments in associates are carried at the lower of the equity accounted amount and recoverable amount. Under this method,
Goodman’s share of post-acquisition gains or losses of associates is recognised in the consolidated income statement and
its share of post-acquisition movements in reserves is recognised in consolidated reserves. Cumulative post-acquisition
movements in both profit or loss and reserves are adjusted against the cost of the investment.
JVs
A JV is an arrangement in which Goodman is considered to have joint control for accounting purposes, whereby Goodman has
rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. In the consolidated
financial statements, investments in JVs are accounted for using the equity method. Investments in JVs are carried at the lower
of the equity accounted amount and recoverable amount. Goodman’s share of the JVs’ net profit or loss is recognised in the
consolidated income statement from the date the arrangement commences to the date the arrangement ceases. Movements in
reserves are recognised directly in consolidated reserves.
91
Goodman Group
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
6 Property assets (continued)
(i) Investments in associates
Investments in Partnerships classified as associates are set out below:
Goodman
GIT
Share of net
results
Ownership
interest
Investment
carrying
amount
Share of net
results
Ownership
interest
Investment
carrying
amount
Name of
associate
Country of
establishment
2021
$M
2020
$M
2021
%
2020
%
2021
$M
2020
$M
2021
$M
2020
$M
2021
%
2020
%
2021
$M
2020
$M
Property investment
Goodman Australia
Industrial Partnership
(GAIP)
Goodman Australia
Partnership (GAP)
Goodman Property
Trust (GMT)1
Goodman Hong Kong
Logistics Partnership
(GHKLP)
Australia
366.9 201.8 29.1
28.8 2,208.5 1,729.8
366.9 201.8 29.1
28.8 2,208.5 1,729.8
Australia
192.1
91.6 19.9 19.9
850.9
762.6
192.1
91.6 19.9 19.9
850.9
762.6
New Zealand
126.7
52.1 22.4 21.4
633.4
490.8
–
–
–
–
–
–
Cayman Islands
137.3 284.7 20.3 20.2 1,522.5 1,510.6
137.3 284.7 20.3 20.2 1,522.5 1,510.6
Goodman Japan Core
Partnership (GJCP)2
Japan
29.8
32.5 14.7
15.5
376.3
365.0
–
–
–
–
–
–
Goodman European
Partnership (GEP)
Luxembourg
140.0
83.2 20.4 20.4
711.0
758.4
140.0
83.2 20.4 20.4
711.0
758.4
992.8 745.9
6,302.6 5,617.2
836.3 661.3
5,292.9 4,761.4
1.
GMT is listed on the New Zealand Stock Exchange (NZX). The market value of Goodman’s investment in GMT at 30 June 2021 using the quoted price on the last day
of trading was $676.6 million (2020: $565.6 million).
2. Goodman’s ownership interest in GJCP reflected the weighted average ownership interest in the various property investment vehicles.
The reconciliation of the carrying amount of investments in Partnerships classified as associates is set out as follows:
Movement in carrying amount of investments in associates
Carrying amount at the beginning of the year
Share of net results after tax (before fair value adjustments)
Share of fair value adjustments attributable
to investment properties after tax
Share of fair value adjustments on derivative financial instruments
Share of net results
Share of movements in reserves
Acquisitions
Disposals
Capital return
Distributions received and receivable
Effect of foreign currency translation
Goodman
2021
$M
5,617.2
261.7
765.8
(34.7)
992.8
0.3
287.2
(3.9)
(79.7)
(318.4)
(192.9)
2020
$M
4,856.0
226.8
493.3
25.8
745.9
(1.8)
272.6
(6.8)
(59.7)
(207.6)
18.6
GIT
2021
$M
4,761.4
225.4
643.3
(32.4)
836.3
0.3
211.6
–
(79.7)
(287.6)
(149.4)
2020
$M
4,120.4
191.4
445.6
24.3
661.3
(1.8)
187.9
–
(59.7)
(172.0)
25.3
Carrying amount at the end of the year
6,302.6
5,617.2
5,292.9
4,761.4
92
Annual Report 2021
The table below includes further information regarding Partnerships classified as associates, held at the end of the financial year:
GAIP
GAP
GMT
GHKLP
GJCP
GEP
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
Summarised statement
of financial position
Total current assets
698.4
230.3
61.3
170.9
8.3
13.6
75.0
129.7
227.6
326.2
461.3 1,422.6
Total non-current assets
9,338.5 8,406.4 5,338.1 4,385.5 3,562.2 2,954.6 9,188.4 8,913.5 3,672.8 3,486.8 5.318.4 5,043.6
Total current liabilities
402.2
114.9
98.9
111.4
113.7
111.8
176.2
216.6
23.7
25.7
456.5
365.9
Total non-current liabilities
2,097.3 2,575.2 1,094.9
682.8
685.8
611.2 1,584.9 1,411.1 1,324.7 1,424.5 1,832.1 2,376.7
Net assets (100%)
7,537.4 5,946.6 4,205.6 3,762.2 2,771.0 2,245.2 7,502.3 7,415.5 2,552.0 2,362.8 3,491.1 3,723.6
Summarised statement
of comprehensive income
Revenue
418.1
428.0
256.2
258.7
109.4
139.0
270.9
294.5
189.8
265.4
440.8
357.4
Profit after tax and revaluations
1,263.1
730.5
964.6
460.1
590.2
243.0
677.1 1,409.9
189.5
191.8
744.4
404.0
Other comprehensive (loss)/income
–
–
–
–
–
–
1.5
(8.8)
–
–
–
–
Total comprehensive income (100%)
1,263.1
730.5
964.6
460.1
590.2
243.0
678.6 1,401.1
189.5
191.8
744.4
404.0
Goodman
Consolidated ownership interest
29.1% 28.8% 19.9% 19.9% 22.4% 21.4% 20.3% 20.2% 14.7% 15.5% 20.4% 20.4%
Consolidated share of net assets
2,190.9 1,711.5
837.3
749.1
621.1
480.9 1,521.2 1,498.6
376.2
365.5
711.0
758.4
Other items, including
capitalised costs
1.2
1.0
0.3
0.2
12.3
Distributions receivable1
16.4
17.3
13.3
13.3
–
9.9
–
1.3
–
1.5
10.5
0.1
–
(0.5)
–
–
–
–
–
Carrying amount of investment
2,208.5 1,729.8
850.9
762.6
633.4
490.8 1,522.5 1,510.6
376.3
365.0
711.0
758.4
Distributions received
and receivable
GIT
66.2
66.3
24.1
29.2
14.7
18.4
33.6
32.7
16.1
17.2
163.7
43.8
Consolidated ownership interest
29.1% 28.8% 19.9% 19.9%
Consolidated share of net assets
2,190.9 1,711.5
837.3
749.1
Other items, including
capitalised costs
1.2
1.0
0.3
0.2
Distributions receivable1
16.4
17.3
13.3
13.3
Carrying amount of
investment in associate
Distributions received
and receivable
2,208.5 1,729.8
850.9
762.6
66.2
66.3
24.1
29.2
–
–
–
–
–
–
–
20.3% 20.2%
– 1,521.2 1,498.6
–
–
1.3
–
1.5
10.5
– 1,522.5 1,510.6
–
33.6
32.7
–
–
–
–
–
–
–
–
–
–
–
–
20.4% 20.4%
711.0
758.4
–
–
–
–
711.0
758.4
163.7
43.8
1.
Distributions receivable related to distributions provided for but not paid by the Partnerships at 30 June 2021. This was applicable to trusts in Australia where
unitholders were presently entitled to income at the end of the financial year.
93
Goodman Group
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
6 Property assets (continued)
(ii) Investments in JVs
A summary of the results and ownership interests of principal Partnerships classified as JVs is set out below:
Goodman
GIT
Share of net
results
Ownership
interest
Investment
carrying amount
Share of net
results
Ownership
interest
Investment
carrying amount
2021
$M
2020
$M
2021
%
2020
%
2021
$M
2020
$M
2021
$M
2020
$M
2021
%
2020
%
2021
$M
2020
$M
Name of JV
Country of
establishment/
incorporation
Property investment
Australia
47.6
20.0
40.0
40.0
228.3
189.2
47.6
20.0
40.0
40.0
228.3
189.2
Luxembourg
27.6
13.0
19.2
20.5
151.9
137.4
40.3
49.4
50.0
50.0
76.1
119.3
65.2
30.3
20.0
20.0
832.7
737.2
32.9
14.8
33.3
33.3
404.0
277.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
KWASA Goodman
Industrial
Partnership (KGIP)
KWASA Goodman
Germany (KGG)1
Property development
Goodman Japan
Development
Partnership (GJDP) Japan
Property investment and development
Goodman China
Logistics
Partnership (GCLP) Cayman Islands
Goodman UK
Partnership (GUKP)2 United Kingdom
Goodman
North America
Partnership (GNAP)
United States
of America
Other JVs3
379.5 127.7
55.0
55.0 2,310.6 1,988.5
365.7 123.1
53.0
53.0 2,226.8
1,916.4
123.0
21.1
716.1 276.3
353.8
305.0
124.2
21.1
4,357.4 3,753.6
537.5 164.2
330.4
281.3
2,785.5 2,386.9
1. The consolidated ownership interest in KGG reflected the weighted average ownership in the various property investment vehicles.
2.
3.
GUKP incorporated two separate investment vehicles in which the investment partners, including the Consolidated Entity, had the same ownership interests.
Other JVs included the Group’s investment in Goodman Brazil Logistics Partnership. Additionally, the share of net results of other JVs for FY21 included $95.9 million
(FY20: $nil) of valuation gains in respect of property development JVs in Australia.
The reconciliation of the carrying amount of investments in Partnerships classified as JVs is set out as follows:
Movement in carrying amount of investments in JVs
Carrying amount at the beginning of the year
Share of net results after tax (before fair value adjustments)
Share of fair value adjustments attributable to investment properties after tax1
Share of fair value adjustments on derivative financial instruments
Share of net results
Share of movements in reserves
Reclassification of loan to related party
Acquisitions
Disposals
Transfer to assets held for sale
Capital return
Distributions/dividends received and receivable
Effect of foreign currency translation
Carrying amount at the end of the year
Goodman
2021
$M
3,753.6
180.3
530.0
5.8
716.1
2.9
–
449.7
(8.1)
–
(176.6)
(218.0)
(162.2)
2020
$M
3,596.4
173.1
112.8
(9.6)
276.3
(25.8)
(3.3)
504.2
(0.3)
(11.2)
(368.6)
(252.8)
38.7
GIT
2021
$M
2,386.9
104.6
428.8
4.1
537.5
–
–
197.4
(8.1)
–
(86.4)
(85.0)
(156.8)
2020
$M
2,280.6
83.1
90.4
(9.3)
164.2
–
–
335.8
–
–
(355.2)
(62.3)
23.8
4,357.4
3,753.6
2,785.5
2,386.9
The share of fair value adjustments attributable to investment properties after tax for FY21 included $95.9 million (FY20: $nil) of valuation gains in respect of properties
under development that as at 30 June 2021 were subject to conditional contracts for disposal.
At 30 June 2021, the Group’s share of carried forward valuation gains on development properties subject to conditional contracts for disposal, incorporating all
valuation gains since the commencement of the development or the most recent redevelopment, was $95.9 million (FY20: nil).
1.
94
Annual Report 2021
The table below includes further information regarding principal Partnerships classified as JVs, held at the end of the financial year:
KGIP
KGG
GJDP
GCLP
GUKP
GNAP
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
Summarised statement of financial position
Current assets
Cash and cash equivalents
Other current assets
Total current assets
2.7
2.0
4.7
9.0
1.8
10.8
25.3
4.4
29.7
36.5
6.5
43.0
79.9
10.6
90.5
112.6
281.3
231.1
43.4
38.6
16.1
84.4
73.5 1,490.3
2.0
128.7
365.7
304.6 1,533.7
40.6
62.8
33.7
96.5
39.6
0.1
39.7
Total non-current assets
851.8
718.4 1,441.9 1,215.1
254.2
378.5 5,537.5 4,741.5
–
813.4 4,846.1
4,291.7
Current liabilities
Other current liabilities
Total current liabilities
Non-current liabilities
53.6
53.6
16.4
16.4
17.4
17.4
88.8
88.8
3.9
3.9
28.7 2,796.4
2,736.5
28.7 2,796.4 2,736.5
36.1
36.1
15.5
102.8
15.5
102.8
58.5
58.5
Financial liabilities
242.5
248.0
505.8
460.8
188.6
232.0
757.7
390.1
287.0
Other non-current liabilities
0.8
1.4
159.3
37.2
4.3
12.8
613.7
509.8
–
Total non-current liabilities
243.3
249.4
665.1
498.0
192.9
244.8 1,371.4
899.9
287.0
–
–
–
640.3
653.1
6.7
13.4
647.0
666.5
Net assets (100%)
559.6
463.4
789.1
671.3
147.9
233.7 1,735.4
1,409.7 1,210.6
838.5 4,192.8 3,606.4
Summarised statement
of comprehensive income
Revenue
Net finance (expense)/income
Income tax expense
Profit after tax
and revaluations
43.6
(3.8)
–
43.4
62.9
100.0
492.5
519.6
193.6
193.3
(7.6)
–
(8.3)
(4.7)
(5.6)
(22.3)
–
(2.1)
(0.8)
(3.1)
(19.2)
(37.4)
(22.4)
(23.9)
28.5
(3.7)
–
17.0
181.7
170.1
–
–
6.4
(0.5)
(18.0)
(0.4)
118.9
50.0
189.7
80.2
80.6
98.8
326.2
151.4
98.7
44.5
690.0
301.6
Other comprehensive income
–
–
–
–
–
–
(12.8)
(129.0)
–
–
–
–
Total comprehensive
income (100%)
Goodman
Consolidated
ownership interest
Consolidated share
of net assets
Shareholder loan1
Other items, including
capitalised costs
118.9
50.0
189.7
80.2
80.6
98.8
313.4
22.4
98.7
44.5
690.0
301.6
40.0% 40.0% 19.2% 20.5% 50.0% 50.0% 20.0% 20.0% 33.3% 33.3% 55.0% 55.0%
223.8
185.4
151.9
137.4
74.0
116.9
347.1
282.0
403.5
279.5 2,306.0 1,983.5
–
–
–
–
–
–
–
–
–
–
–
2.1
–
–
482.3
451.9
–
–
–
–
2.4
–
3.3
–
3.4
–
0.5
–
(2.5)
–
4.6
–
5.0
–
Distributions receivable
4.5
3.8
Carrying amount
of investment
Distributions/dividends
received and receivable
GIT
Consolidated
ownership interest
Consolidated share
of net assets
Other items, including
capitalised costs
Distributions receivable
Carrying amount
of investment in JV
Distributions/dividends
received and receivable
228.3
189.2
151.9
137.4
76.1
119.3
832.7
737.2
404.0
277.0 2,310.6 1,988.5
8.4
7.1
15.9
20.4
102.5
163.7
6.1
3.1
4.6
–
57.8
53.6
40.0% 40.0%
223.8
185.4
–
4.5
–
3.8
228.3
189.2
8.4
7.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
53.0% 53.0%
– 2,222.2 1,911.4
–
–
4.6
–
5.0
–
– 2,226.8
1,916.4
–
55.7
51.6
1.
Shareholder loans have been provided by investors of GCLP in proportion to their ownership interest. The shareholder loans are interest free, unsecured and have no
fixed terms of repayment. The shareholder loans are not expected to be repaid within 12 months from the end of the reporting period and the Directors consider the
loans to form part of Goodman’s investment in GCLP.
With respect to Goodman’s other JVs, the total profit after tax and revaluations was $332.4 million (2020: $92.9 million) and total
other comprehensive loss was $12.8 million (2020: $nil). With respect to GIT’s other JVs, the total profit after tax and revaluations
was $341.2 million (2020: $107.5 million) and total other comprehensive income was $nil (2020: $nil).
95
Goodman Group
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
7. Receivables
Receivables comprise trade and other receivables and loans
to related parties and are recognised on the date that they are
originated, initially at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition,
receivables are measured at amortised cost using the effective
interest rate method, less any impairment losses.
Receivables are derecognised when the contractual rights
to the cash flows from the receivable expire or the Group
transfers the rights to receive the contractual cash flows on
the receivable in a transaction in which substantially all the
risks and rewards of the receivable are transferred.
Goodman
2021
$M
2020
$M
GIT
2021
$M
2020
$M
16.4
16.1
15.6
9.0
197.2
91.6
0.1
1.4
5.8
2.7
3.0
4.3
Current
Trade receivables
Tax receivables
Other receivables
Amounts due from
related parties1
Goodman assessed the receivables balances at 30 June 2021
for expected credit losses (risk of non-payment). The level of
provisioning was not significant in the context of the Group’s
financial position.
8. Contract balances
Contract assets primarily comprise amounts recoverable
from fixed price development contracts (disclosed net of any
payments received on account) and accrued performance fee
income where the Group assesses that the income can be
reliably measured.
Contract liabilities primarily comprise consideration received
in advance of the completion of development contracts and
rental guarantees.
The following table provides an analysis of receivables
from contracts with customers (excluding rental income
receivables), contract assets and contract liabilities at the
reporting dates:
Goodman
2021
$M
2020
$M
143.6
146.1
80.9
5.0
25.7
12.3
1.0
1.5
101.6
132.4
0.1
0.3
Current
Loans to related parties1
–
33.7
808.7 1,591.8
331.3
282.3
816.1 1,602.1
Non-current
Receivables, which are included
in trade receivables, other receivables
and amounts due from related parties
Other receivables
7.1
8.1
–
–
Loans to related parties1
270.4
100.2
2,528.5 1,487.4
277.5
108.3
2,528.5 1,487.4
1. Refer to note 24 for details of amounts due from and loans to related parties.
Contract assets
Contract liabilities
Non-current
Contract liabilities
Significant changes in the contract assets and the contract liabilities balances during the year are set out below:
Goodman
2021
2020
Contract
assets
$M
25.7
237.5
(182.3)
–
–
–
80.9
80.9
–
80.9
Contract
liabilities
$M
13.8
–
–
(7.7)
0.1
(0.2)
6.0
5.0
1.0
6.0
Contract
assets
$M
308.1
531.3
(823.9)
–
–
10.2
25.7
25.7
–
25.7
Contract
liabilities
$M
9.0
–
(0.1)
(1.6)
6.5
–
13.8
12.3
1.5
13.8
Balance at the beginning of the year
Increase due to changes in the measure of progress during the year
Transfers from contract assets to receivables
Revenue recognised that was included in the contract
liability balance at the beginning of the year
Increases due to cash received, excluding amounts
recognised as revenue during the year
Effect of foreign currency translation
Balance at the end of the year
Current contract assets and liabilities
Non-current contract liabilities
96
Transaction price allocated to the remaining
contract obligations
The amount of the transaction price allocated to the remaining
performance obligations under Goodman’s existing contracts
was $12.5 million (2020: $14.3 million). This amount represents
revenue expected to be recognised in the future from ongoing
management and fixed price development contracts with
customers. Goodman will recognise the expected revenue in
the future as the work is completed, which is expected to be
within the next 12 months.
Details regarding Goodman’s future rental income associated
with existing lease agreements is included in note 6.
In addition, Goodman receives investment management,
development management and property services fees under
various contracts that it has with its Partnerships. These
contracts are for varying lengths of time and are typically
transacted on terms that are consistent with market practice.
The revenues under these contracts are linked to the AUM,
total development project costs or gross property income of
Partnerships and are invoiced as the services are provided.
9. Assets held for sale
At 30 June 2021, assets held for sale amounting to $41.5
million comprised an investment property in Australia.
In the prior year, the Group together with GEP entered into an
agreement with a third party in March 2020 to dispose a portfolio
of property assets and the Group’s operating platform in the
Czech Republic, Hungary, Poland and Slovakia. The disposal
was completed on 8 July 2020. At 30 June 2020, the directly held
assets and liabilities to be disposed were presented as a disposal
group held for sale and comprised the following assets and
liabilities within the Continental Europe segment:
Cash
Receivables
Inventories
Investments accounted for
using the equity method
Other assets
Payables1
Assets held for sale
Note
21(a)
6f(ii)
2020
$M
10.9
6.5
89.0
11.2
6.9
(12.0)
112.5
1.
Excludes $77.7 million payable to fellow controlled entities in Goodman Group
as these amounts are eliminated on consolidation.
No impairment losses were recognised in the current and prior
year in respect of the disposal group.
Annual Report 2021
10. Payables
Trade and other payables are recognised initially at trade
date fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, trade and other payables are
measured at amortised cost.
Trade and other payables are derecognised when the
contractual obligations are discharged or cancelled or expire.
Financial assets and liabilities are offset and the net amount
presented in the statement of financial position when, and
only when, there is a legal right to offset the amounts and an
intention to either settle on a net basis or to realise the asset
and settle the liability simultaneously.
Goodman
2021
$M
2020
$M
GIT
2021
$M
2020
$M
Current
Trade payables
73.1
74.8
7.1
0.8
Other payables and accruals
487.8
497.4
51.3
125.8
Contract liabilities
Loans from related parties1
5.0
–
12.3
–
–
–
549.2
528.7
565.9
584.5
607.6
655.3
Non-current
Other payables and accruals
124.5
83.9
Contract liabilities
Loans from related parties1
1.0
–
1.5
–
3.7
–
0.2
–
228.5
231.3
125.5
85.4
232.2
231.5
1. Refer to note 24 for details of loans from related parties.
11. Provisions
A provision is recognised when there is a legal, equitable or
constructive obligation as a result of a past event and it is
probable that a future sacrifice of economic benefits will be
required to settle the obligation, the timing or amount of which
is uncertain.
Goodman
2021
$M
2020
$M
Note
GIT
2021
$M
2020
$M
Current
Dividends/
distributions to
Securityholders
Other provisions
Non-current
Net defined benefit
superannuation
funds in the
United Kingdom
Other provisions
19
277.1
274.3
166.3
201.1
17.1
15.1
–
–
294.2
289.4
166.3
201.1
22.0
1.7
24.8
4.2
23.7
29.0
–
–
–
–
–
–
97
Goodman Group
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
Information about leases for which Goodman is a lessee is
detailed below:
Right of use assets
Inventories
Investment properties
Property, plant and equipment
Lease liabilities
Current
Non-current
2021
$M
359.2
340.3
39.6
739.1
11.9
82.1
94.0
20201
$M
122.9
273.6
37.1
433.6
17.6
29.2
46.8
1.
The comparative figures for inventories and investment properties have been
updated to include right of use assets for which the lease payments have been
made upfront.
The following were recognised during the year:
Additions to right of use assets
Depreciation for right of use assets
Interest expense on lease liabilities
Cash outflows on lease liabilities
2021
$M
402.9
15.1
1.0
18.8
2020
$M
47.9
17.1
1.3
17.7
12. Property, plant and equipment
Property, plant and equipment at cost
Accumulated amortisation
2021
$M
2020
$M
128.7
115.6
(74.1)
(64.7)
Property, plant and equipment at net book value1
54.6
50.9
1. Refer to note 13 for property, plant and equipment held as a lessee.
13. Leases
Goodman leases office buildings, motor vehicles and office
equipment. Certain investment properties and developments
classified as inventories are also built on land held under
leasehold interests.
Goodman recognises a right of use asset and a lease liability at
the lease commencement date. The right of use asset is initially
measured at cost plus any direct costs incurred and an estimate
of costs to restore the underlying asset or the site on which it is
located, less any lease incentives received.
The lease liability is initially measured at the present value of the
lease payments that are not paid at the commencement date,
discounted using the lessee’s incremental borrowing rate. After
initial recognition, the lease liability is measured at amortised
cost and interest expense is calculated using the effective
interest method. The lease liability is remeasured when there is
a change in future lease payments arising from a change in an
index or rate, or there is a change arising from the reassessment
of whether Goodman will be reasonably certain to exercise an
extension or termination option.
The right of use assets in respect of office buildings, motor
vehicles and office equipment are depreciated using the straight-
line method over the period of the lease. Right of use assets that
meet the definition of investment property are carried at fair value
in accordance with note 6(a). Ground leases of development
land that are classified as inventories are not depreciated but are
assessed at each reporting date for impairments to ensure they
are recorded at the lower of cost and net realisable value.
98
Annual Report 2021
14. Goodwill and intangible assets
Goodman recognises both goodwill and indefinite life
management rights in its statement of financial position.
Goodwill
Goodwill arising on the acquisition of controlled entities is
stated at cost less any accumulated impairment losses (refer
below). No amortisation is provided.
Management rights
When fund and/or investment management activities are
acquired as part of a business combination, management
rights are recorded where they arise from contractual or other
legal rights, and the fair value can be measured reliably.
Management rights are stated at cost less impairment.
Management rights are not amortised as they are assumed
to have an indefinite life given they are routinely renewed at
minimal cost and on broadly similar terms.
Impairment
The carrying amounts of goodwill and management rights are
tested annually for impairment. For the purpose of impairment
testing, goodwill and management rights are allocated to the
related cash-generating units monitored by management.
An impairment loss is recognised whenever the carrying
amount of the cash-generating unit exceeds its recoverable
amount. Recoverable amount is the greater of the fair value
(net of disposal costs) and the value in use but given that
goodwill and management rights are not frequently traded
(i.e. fair value is difficult to ascertain), the recoverable amount
will be equal to the value in use of the cash-generating unit.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of
money and the risks specific to the cash-generating unit.
Impairment losses are recognised in the income statement.
Impairment losses recognised in respect of cash-generating
units are allocated first to reduce the goodwill allocated to
the cash-generating unit, then to the carrying amount of the
management rights allocated to the cash-generating unit and
then to reduce the carrying amount of the other assets in the
cash-generating unit on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. An
impairment loss for management rights is reversed only to the
extent that its carrying amount does not exceed its original cost.
A summary of Goodman’s goodwill and intangible assets is set
out by below:
Goodwill
Management rights
Goodman
2021
$M
715.2
107.4
822.6
The carrying value of goodwill and intangible assets is
analysed by division in the table below:
Goodwill
Continental Europe
United Kingdom
Other
Subtotal – goodwill
Management rights
Continental Europe
Other
Subtotal – management rights
Total
2021
$M
601.4
90.5
23.3
715.2
34.1
73.3
107.4
822.6
2020
$M
735.1
110.7
845.8
2020
$M
620.8
88.4
25.9
735.1
35.3
75.4
110.7
845.8
A reconciliation of the movement in the cost of goodwill and management rights during the financial year is set out below:
Cost
Goodwill
Continental Europe
United Kingdom
Other
Subtotal – goodwill
Management rights
Continental Europe
Other
Subtotal – management rights
Total
Balance at
30 June 2019
$M
Effect of
foreign currency
translation
$M
Balance at
30 June 2020
$M
Effect of
foreign currency
translation
$M
Balance at
30 June 2021
$M
623.6
129.0
33.4
786.0
35.0
85.7
120.7
906.7
5.0
(1.1)
0.3
4.2
0.3
1.5
1.8
6.0
628.6
127.9
33.7
790.2
35.3
87.2
122.5
912.7
(19.6)
3.1
(2.8)
(19.3)
(1.2)
(2.5)
(3.7)
(23.0)
609.0
131.0
30.9
770.9
34.1
84.7
118.8
889.7
99
Goodman Group
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
14 Goodwill and intangible assets (continued)
A reconciliation of the movement in the impairment losses during the financial year is set out below:
Impairment losses
Goodwill
Continental Europe
United Kingdom
Other
Subtotal – goodwill
Other
Subtotal – management rights
Total
Impairments and reversals of impairments
Balance at
30 June 2019
$M
Effect of
foreign currency
translation
$M
Balance at
30 June 2020
$M
Effect of
foreign currency
translation
$M
Balance at
30 June 2021
$M
7.7
39.8
7.7
55.2
11.5
11.5
66.7
0.1
(0.3)
0.1
(0.1)
0.3
0.3
0.2
7.8
39.5
7.8
55.1
11.8
11.8
66.9
(0.2)
1.0
(0.2)
0.6
(0.4)
(0.4)
0.2
7.6
40.5
7.6
55.7
11.4
11.4
67.1
There were no impairment losses or reversals of impairment losses during either the current or prior financial year.
Impairment testing for intangible assets
The carrying values of both goodwill and indefinite life management rights are assessed for impairment annually. For the purpose of
impairment testing, goodwill and indefinite life management rights are allocated to the Goodman divisions that represent the lowest level
within Goodman at which the goodwill and indefinite life management rights are monitored for internal management purposes. Where
goodwill and management rights arise in the same division, impairment testing has been performed on the combined intangible asset.
The impairment tests for all intangible assets are based on each division’s value in use. Value in use is determined by discounting the
future projected cash flows generated from continuing operations. These cash flows are for a five-year period, with a year five terminal
value calculated using a terminal growth rate and an appropriate discount rate for each division.
The key drivers of value in respect of the intangible assets are:
+
+
Development cash flows, which are impacted by development volumes and margins and whether the developments are
undertaken directly by Goodman or directly by Partnerships or in joint venture with Partnerships
Management cash flows, which are driven by the level of AUM and net property income in Partnerships and, in the case of
portfolio performance fee income, the long-term performance of the Partnerships.
The estimation of future cash flows requires assumptions to be made regarding uncertain future events. The cash flows do not
assume a downturn in earnings that might arise in the event of a significant adverse change in market conditions for the Group. The
cash flows also assume that Goodman’s management contracts with Partnerships have an indefinite life. This is on the basis that in
the past these contracts have been typically renewed at minimal cost and on broadly similar financial terms.
When assessing a potential impairment, the value in use is compared against the sum of the intangible asset balance and the plant
and equipment balance for each division.
Key assumptions
Value in use (A$M)
Pre-tax discount rate (per annum)
Average annual development (million square metres)
Average annual growth in assets under management (AUM)
Continental Europe
United Kingdom
2021
2020
2021
2020
2021
2020
2021
2020
2,344.9
2,341.7
9.7%
9.4%
0.60
0.60
8.0%
3.4%
161.1
153.6
9.6%
8.6%
0.16
0.16
21.6%
28.9%
All amounts were calculated in local currency and translated to Australian dollars at the closing exchange rate at the end of the
financial period. Averages related to average amounts over the five-year forecast period.
100
Annual Report 2021
Value in use
The value in use for both Continental Europe and the United Kingdom are consistent with the prior years. The Group’s strategy remains
the same with assets focused on core infill locations.
Discount rates
The post-tax discount rates were determined using the capital asset pricing model, with individual assumptions referenced to market
data, where available, and adjusting for specific factors associated with each division. A risk premium was included in each division’s
discount rate, reflecting the level of forecasting, size, country and financing risks for that division. The value in use was determined
using the after-tax cash flows and the post-tax discount rates, with the discount rates then converted to the equivalent pre-tax rates.
Developments
Demand for modern, well-located industrial product in both Continental Europe and the United Kingdom remains strong. Earnings
forecasts for each division include projects which have not yet been contracted.
Continental Europe
The activities will be focused on core markets in western and southern Europe. The average annual development activity over the next
five years is expected to be 0.6 million square metres and the estimated cash outflow from Goodman and Partnerships required to
fund the assumed development pipeline across the forecast period is A$0.9 billion per annum.
United Kingdom
The activity will continue to be focused on the core markets close to London and along the M1 corridor. In the short term,
developments will include a number of sites that have already been acquired. The division’s development activity over the next five
years is forecast to be 0.16 million square metres per annum, on average, which will be undertaken by GUKP, with Goodman earning
development management fee income. The estimated cash outflow from Goodman and GUKP required to finance the assumed
development pipeline across the forecast period is A$0.42 billion per annum.
Sources of funding for development activity
Capital inflows required to fund acquisitions and development activity in both divisions are assumed to arise from the following
sources: equity investment directly into Partnerships (including distribution reinvestment plans) by Goodman and its investment
partners (in some cases, the projections assume future equity investment will be greater than existing commitments); lending facilities
advanced to Partnerships; debt capital markets; customer-funded turnkey developments; and proceeds from disposals of assets. It is
not practicable to determine the percentage of the total which will flow from each source.
Funds available to Goodman and its investment partners are assumed to be sourced from available global markets and are not limited
to lending markets in the regions to which the relevant intangible asset relates.
AUM
For Continental Europe, the average annual increase in AUM of 8.0% (2020: 3.4%) over the forecast period is higher than the prior
year forecasts following the disposal of assets in central and eastern Europe in FY21. The projected AUM assumes that most of the
development over the forecast period is for Partnerships. For the purpose of the value in use assessments, capitalisation rates are
expected to be stable over the period and no portfolio performance revenue is assumed.
For United Kingdom, the significant percentage growth in AUM over the period reflects the fact that GUKP is a relatively new
Partnership, with AUM forecast to grow from £0.9 billion to approximately £2.3 billion. GUKP has secured a number of sites that will
be developed over the next three years and underpin the projected growth. For the purpose of the forecasts, capitalisation rates are
expected to be stable over the period.
Assumptions impacting the terminal year
Growth rate applied to future cash flows (per annum)
Development in terminal year (million square metres)
Development in terminal year (cost in A$B)
2021
2020
2021
2020
2021
2020
Continental Europe
United Kingdom
0.4%
0.6%
0.60
0.60
0.92
0.96
1.5%
1.0%
0.19
0.19
0.36
0.36
Long-term growth rates have been used to extrapolate cash flow projections beyond the period covered by the five-year
forecast. For both Continental Europe and United Kingdom, the growth rate was based on the consumer price indices.
The forecast cost of developments in year five represents the estimated total funding requirements for both directly held developments
and developments within Partnerships. The cost of developments in Australian dollars has remained relatively stable.
101
Goodman Group
Notes to the consolidated financial statements
CAPITAL MANAGEMENT
The notes in this section focus on Goodman’s and GIT’s financing activities, capital structure and management of the financial
risks involved.
15. Net finance income/(expense)
Interest income and expense are recognised using the effective interest rate method.
Finance costs relating to a qualifying asset are capitalised as part of the cost of that asset using a weighted average cost of
debt. Qualifying assets are assets which take a substantial time to get ready for their intended use or sale. All other finance
costs are expensed using the effective interest rate method.
Finance income
Interest income from:
– Related parties
– Other parties
Fair value adjustments on derivative financial instruments
Foreign exchange gains
Finance expense
Goodman
2021
$M
8.1
2.3
83.9
–
94.3
Interest expense from third party loans, overdrafts and derivatives
(18.3)
Interest expense from related party loans
Other borrowing costs
Fair value adjustments on derivative financial instruments
Foreign exchange losses
Capitalised borrowing costs1
Net finance (expense)/income
–
(7.4)
–
(0.4)
6.7
(19.4)
74.9
2020
$M
1.3
11.9
–
–
13.2
(86.6)
–
(8.7)
(9.4)
(0.1)
11.4
(93.4)
(80.2)
GIT
2021
$M
69.1
1.4
104.0
3.4
177.9
(25.9)
(11.7)
(4.8)
–
–
–
(42.4)
135.5
2020
$M
123.2
9.9
–
–
133.1
(98.9)
(9.5)
(16.2)
(6.0)
(26.6)
–
(157.2)
(24.1)
1.
Borrowing costs were capitalised to inventories and investment properties under development during the financial year at rates between 0.92% and 4.0% per annum
(2020: 1.7% and 4.2% per annum).
102
Annual Report 2021
16. Interest bearing liabilities
Interest bearing liabilities comprise bank loans, notes issued in the capital markets and private placements. Interest bearing
liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition,
interest bearing liabilities are measured at amortised cost using the effective interest rate method.
Current
Unsecured:
– USD denominated notes
Non-current
Unsecured:
– Bank loans
– USD denominated notes
–
–
EUR denominated notes
Foreign private placement
Borrowing costs
Note
16(a)
16(b)
16(c)
16(d)
Goodman
2021
$M
–
–
–
1,133.8
790.3
150.1
(13.9)
2020
$M
260.1
260.1
50.0
1,659.2
815.9
168.3
(15.0)
GIT
2021
$M
–
–
–
1,133.8
790.3
150.1
(11.4)
2020
$M
260.1
260.1
50.0
1,659.2
815.9
168.3
(14.0)
2,060.3
2,678.4
2,062.8
2,679.4
(a) Bank loans, unsecured
As at 30 June 2021, Goodman and GIT had the following unsecured bank facilities.
Goodman
GIT
Facility limit
$M
Amounts drawn
$M
Facility limit
$M
Amounts drawn
$M
Facility maturity date
31 Dec 2023
31 Mar 2024
1 Jul 2024
31 Jul 2024
30 Sep 2024
30 Sep 2024
31 Dec 2024
31 Mar 2026
31 Mar 2026
30 Jun 2026
30 Sep 2026
Total as at 30 June 2021
Total as at 30 June 2020
50.0
75.0
50.0
133.4
50.0
37.5
118.5
180.1
96.1
75.0
180.1
1,045.7
1,120.9
–
–
–
–
–
–
–
–
–
–
–
–
50.0
50.0
75.0
50.0
133.4
50.0
37.5
118.5
–
–
75.0
–
589.4
609.4
The majority of the unsecured bank loans are multi-currency facilities.
–
–
–
–
–
–
–
–
–
–
–
–
50.0
103
Goodman Group
Notes to the consolidated financial statements
Capital management (continued)
16 Interest bearing liabilities (continued)
(b) USD denominated notes
As at 30 June 2021, Goodman and GIT had notes on issue in the United States 144A/Reg S bond market as follows:
Notes maturity date
15 Mar 2028
15 Oct 2037
30 June 2021
30 June 2020
(c) EUR denominated notes
Carrying amount
Face value
Coupon (fixed)
A$M
700.3
433.5
1,133.8
1,919.3
US$M
525.0
325.0
850.0
1,322.4
A$M
700.3
433.5
1,133.8
1,892.3
US$M
525.0
325.0
850.0
1,303.8
per annum
3.700%
4.500%
As at 30 June 2021, Goodman and GIT had A$790.3 million (2020: A$815.9 million) (€500.0 million) Reg S EUR denominated
senior notes on issue. The notes have a fixed coupon of 1.375% per annum and mature on 27 September 2025.
(d) Foreign private placement
As at 30 June 2021, Goodman and GIT had A$150.1 million (2020: A$168.3 million) (¥12.5 billion) in a foreign private placement
denominated in Japanese yen. The facility has a fixed coupon of 3.32% per annum payable semi-annually and expires on 3 April 2023.
(e) Finance facilities
Current
30 June 2021
Unsecured:
– Bank loans
– USD denominated notes
– EUR denominated notes
– Foreign private placement
– Bank guarantees1
30 June 2020
Unsecured:
– Bank loans
– USD denominated notes2
– EUR denominated
– Foreign private placement
– Bank guarantees1
Goodman
Facilities
available
$M
Facilities
utilised
$M
GIT
Facilities
available
$M
Facilities
utilised
$M
1,045.7
1,133.8
790.3
150.1
–
–
1,133.8
790.3
150.1
32.7
589.4
1,133.8
790.3
150.1
–
–
1,133.8
790.3
150.1
–
3119.9
2,106.9
2,663.6
2,074.2
1,120.9
1,892.3
815.9
168.3
–
3,997.4
50.0
1,892.3
815.9
168.3
32.8
2,959.3
609.4
1,892.3
815.9
168.3
–
3,485.9
50.0
1,892.3
815.9
168.3
–
2,926.5
1.
2.
Bank guarantees are drawn from facilities available under unsecured bank loans. The guarantees are not reflected as a liability in the statements of financial position.
Facilities available and facilities utilised in respect of the USD denominated notes represent the face value of the notes on issue and exclude the fair value adjustment
of A$27.0 million that is being amortised over the period to maturity.
104
Annual Report 2021
17. Other financial assets and liabilities
Other financial assets and liabilities primarily comprise derivative financial instruments that are recognised initially on the trade
date at which Goodman and GIT become a party to the contractual provisions of the instrument.
Derivative financial instruments and hedging
Goodman and GIT use derivative financial instruments to hedge their economic exposure to foreign exchange and interest
rate risks arising from operating, investing and financing activities. In accordance with the Group’s Financial Risk Management
policy, Goodman and GIT do not hold or issue derivative financial instruments for speculative trading purposes.
Goodman and GIT’s derivative financial instruments are not designated as a hedge for accounting purposes, and accordingly
movements in the fair value of derivative financial instruments are recognised in the income statement.
Cash flow hedges
Certain of Goodman and GIT’s associates and JVs continue to designate derivative financial instruments as cash flow hedges
for accounting purposes. Goodman’s and GIT’s share of the effective portion of changes in the fair value of derivative financial
instruments in associates and JVs that are designated and qualify as cash flow hedges is recognised in the cash flow hedge
reserve. The gain or loss relating to any ineffective portion is recognised in the income statement.
Other financial assets
Current
Derivative financial instruments1
Non-current
Derivative financial instruments1
Investment in unlisted securities, at fair value
Goodman
GIT
2021
$M
16.5
16.5
354.5
8.3
362.8
2020
$M
59.3
59.3
405.8
3.0
408.8
2021
$M
16.5
16.5
292.4
22.0
314.4
2020
$M
59.3
59.3
424.4
19.7
444.1
1.
Includes fair values of derivative financial instruments equating to $134.1 million (2020: $292.5 million) that hedge Goodman’s net investments in Continental Europe
and the United Kingdom.
Other financial liabilities
Current
Derivative financial instruments
Non-current
Derivative financial instruments1
Goodman
GIT
2021
$M
1.9
1.9
211.5
211.5
2020
$M
50.4
50.4
331.0
331.0
2021
$M
1.9
1.9
124.6
124.6
2020
$M
50.4
50.4
302.6
302.6
1.
Includes fair values of derivative financial instruments equating to $62.3 million (2020: $194.0 million) that hedge Goodman’s net investments in Continental Europe
and the United Kingdom.
105
Goodman Group
Notes to the consolidated financial statements
Capital management (continued)
18. Financial risk management
(a) Market risk
Foreign exchange risk
Goodman is exposed to foreign exchange risk through its
investments in New Zealand, Hong Kong, China, Japan,
Continental Europe, the United Kingdom, North America
and Brazil. Foreign exchange risk represents the gain or
loss that would be recognised from fluctuations in currency
prices against the Australian dollar as a result of Goodman’s
net investment in foreign operations, future commercial
transactions, and other foreign currency denominated assets
and liabilities.
In managing foreign exchange risks, Goodman aims to reduce
the impact of short-term fluctuations on Goodman’s earnings
and net assets. However, over the long term, permanent
changes in foreign exchange rates will have an impact on both
earnings and net assets.
Goodman’s capital hedge policy for each overseas region
is to hedge between 65% and 90% of foreign currency
denominated assets with foreign currency denominated
liabilities. This is achieved by borrowing in the same currency
as the overseas investments to form a natural economic
hedge against any foreign currency fluctuations and/or using
derivatives such as cross currency interest rate swaps (CCIRS)
and foreign exchange contracts (FEC).
The Group’s hedge position is monitored on an ongoing
basis and the Group will enter into new derivatives (including
forward start contracts) and close out or enter into contra
derivative contracts to manage the capital hedge position.
The Directors have ultimate responsibility for Goodman’s
financial risk management (FRM) processes and have
established policies, documented in the FRM policy, to
manage Goodman’s exposure to financial risks and to utilise
capital in an efficient manner.
Goodman’s treasury function is responsible for monitoring
the day to day compliance with the Group’s FRM policies
and prepares reports for consideration by management
committees and the Board including:
+ Cash flow projections over a period of at least 12 months
to assess the level of cash and undrawn facilities, and
headline gearing at each month end
+ Debt maturity profile, to allow the Group to plan well in
advance of maturing facilities
+
Interest rate hedge profile over the next 10 years, to allow
the Group to manage the proportion of fixed and floating
rate debt in accordance with its FRM policy
+ Capital hedge position (by currency) and profile of expiring
currency derivatives, to allow the Group to manage its net
investment hedging in accordance with its FRM policy.
Any significant investments or material changes to the finance
facilities or FRM policies require approval by the Board.
Capital management
Goodman’s principal capital management objectives are to
maintain a strong capital base and provide funds for operating
activities (including development expenditure), capital
expenditure and investment opportunities as they arise. This is
achieved through an appropriate mix of debt and equity.
Goodman is able to alter the capital mix by issuing new
Goodman debt and equity securities or hybrid securities, by
reinstating the distribution reinvestment plan, by adjusting the
timing of development and capital expenditure and by selling
assets to reduce borrowings. Goodman also manages capital
through its distribution policy in which distributions made to
Securityholders are based on the Group’s operating profit,
subject to a minimum distribution equal to the taxable income
of the Trust.
Goodman’s key financial risks are market risk (including foreign
exchange and interest rate risk), liquidity risk and credit risk.
106
Annual Report 2021
As at 30 June 2021, the principal that was used to hedge its exposures using derivatives and the weighted average exchange
rates, by currency, are set out below:
Goodman
AUD receivable/NZD payable
AUD receivable/HKD payable
AUD receivable/EUR payable
AUD receivable/GBP payable
AUD receivable/USD payable
AUD receivable/JPY payable
USD receivable/CNY payable
GIT
AUD receivable/NZD payable
AUD receivable/HKD payable
AUD receivable/GBP payable
AUD receivable/USD payable
2021
2020
Amounts
payable
Amounts
receivable
Weighted
average
exchange rate
Amounts
payable
Amounts
receivable
Weighted
average
exchange rate
AUD'M
AUD/NZD
557.3
AUD'M
1,301.8
AUD'M
1,086.7
AUD'M
587.6
AUD'M
894.7
AUD'M
297.2
USD'M
600.0
1.0771
AUD/HKD
5.7659
AUD/EUR
0.6214
AUD/GBP
0.5635
AUD/USD
0.7276
AUD/JPY
NZD'M
(400.0)
HKD'M
(5,190.0)
EUR'M
(495.0)
GBP'M
(280.0)
USD'M
(450.0)
JPY'M
77.5413
(21,000.0)
USD/CNY
7.5753
CNY'M
(3,823.9)
AUD'M
AUD/NZD
368.3
1.0864
AUD'M
AUD/HKD
908.6
5.7260
AUD'M
AUD/EUR
803.0
0.6165
AUD'M
AUD/GBP
496.6
0.5660
AUD'M
AUD/USD
634.6
AUD'M
278.3
0.7141
AUD/JPY
75.4695
USD'M
USD/CNY
500.0
7.6477
2021
2020
Amounts
receivable
Weighted
average
exchange rate
Amounts
payable
Amounts
receivable
Weighted
average
exchange rate
AUD'M
557.3
AUD'M
1,217.8
AUD'M
587.6
AUD/NZD
1.0771
AUD/HKD
5.7523
AUD/GBP
0.5635
AUD'M
AUD/USD
260.2
0.7688
AUD'M
AUD/JPY
NZD'M
(400.0)
HKD'M
(5,190.0)
GBP'M
(280.0)
USD'M
(450.0)
JPY'M
AUD'M
AUD/NZD
368.3
1.0864
AUD'M
AUD/HKD
908.6
5.7260
AUD'M
AUD/GBP
496.6
0.5660
AUD'M
AUD/USD
634.6
0.7141
AUD'M
AUD/JPY
NZD'M
(600.0)
HKD'M
(7,490.0)
EUR'M
(675.0)
GBP'M
(330.3)
USD'M
(650.0)
JPY'M
(23,000.0)
CNY'M
(4,545.2)
Amounts
payable
NZD'M
(600.0)
HKD'M
(6,990.0)
GBP'M
(330.0)
USD'M
(200.0)
JPY'M
AUD receivable/JPY payable
(17,000.0)
225.3
75.4506
(21,000.0)
278.3
75.4695
In addition to the derivatives detailed in the table above, GIT also has a FEC with a controlled entity of GL to hedge that entity’s
USD exposure. On maturity of the contract, GIT will receive USD 257.3 million from GL (2020: USD 81.8 million) and pay GBP
183.9 million to GL (2020: GBP 53.8 million).
107
Goodman Group
Notes to the consolidated financial statements
Capital management (continued)
18 Financial risk management (continued)
Sensitivity analysis
Throughout the financial year, if the Australian dollar had been 5% stronger against all other currencies, with all other variables
held constant, the profit attributable to Securityholders, excluding derivative mark to market and unrealised foreign exchange
movements, would have decreased by A$72.9 million (2020: A$58.2 million decrease) for Goodman and A$28.6 million (2020:
A$22.7 million) for GIT. If the Australian dollar had been 5% weaker against all other currencies, with all other variables held
constant, the profit attributable to Securityholders, excluding derivative mark to market and unrealised foreign exchange
movements, would have increased by A$72.9 million (2020: A$58.2 million increase) for Goodman and A$28.6 million (2020:
A$22.7 million) for GIT.
Interest rate risk
Goodman’s interest rate risk arises from variable rate borrowings and the Group’s CCIRS that hedge the overseas investments.
Goodman adopts a policy of hedging such that between 60% and 100% of its current year exposure to changes in interest rates
on borrowings is on a fixed rate basis. Goodman enters into interest rate derivatives (IRD), comprising both interest rate swaps and
interest rate caps, to manage cash flow risks associated with the interest rates on borrowings that are floating. The IRD contracts are
for 90 day intervals and involve quarterly payments or receipts of the net amount of interest.
As at 30 June 2021, Goodman and GIT’s fixed and floating interest rate exposure (by principal) based on existing interest bearing
liabilities and derivative financial instruments is set out below:
Interest bearing
liabilities
A$M
2,074.2
–
2,074.2
2,903.5
50.0
2,953.5
Interest bearing
liabilities
A$M
2,074.2
–
2,074.2
2,903.5
50.0
2,953.5
Impact of derivatives
CCIRS
A$M
–
(123.6)
(123.6)
–
41.1
41.1
Impact of derivatives
CCIRS
A$M
–
(71.6)
(71.6)
–
36.3
36.3
IRD
A$M
(101.4)
101.4
–
156.9
(156.9)
–
IRD
A$M
(575.6)
575.6
–
(169.4)
169.4
–
Net interest rate
exposure
A$M
1,972.8
(22.2)
1,950.6
3,060.4
(65.8)
2,994.6
Net interest rate
exposure
A$M
1,498.6
504.0
2,002.6
2,734.1
255.7
2,989.8
Goodman
30 June 2021
Fixed rate liabilities
Floating rate liabilities
30 June 2021
Fixed rate liabilities
Floating rate liabilities
GIT
30 June 2021
Fixed rate liabilities
Floating rate liabilities
30 June 2021
Fixed rate liabilities
Floating rate liabilities
108
Annual Report 2021
As a result of the fixed rate interest bearing liabilities and derivative financial instruments that existed at 30 June 2021, Goodman
and GIT would have the following fixed interest rate exposure (by principal) at the end of each of the next five financial years.
This assumes all interest bearing liabilities and derivative financial instruments mature in accordance with current contractual terms.
Goodman
Number of years
post balance date
1 year
2 years
3 years
4 years
5 years
GIT
2021
2020
Fixed interest rate
(by principal)
A$M
Weighted average
interest rate
% per annum
Fixed interest rate
(by principal)
A$M
Weighted average
interest rate
% per annum
1,951.0
2,075.2
2,176.4
1,900.8
1,065.2
2.15
2.12
1.97
2.29
3.36
2,962.1
2,730.9
2,777.1
2,977.2
2,694.0
3.02
2.51
2.04
1.91
2.13
Number of years
post balance date
Fixed interest rate
(by principal)
A$M
Weighted average
interest rate
% per annum
Fixed interest rate
(by principal)
A$M
Weighted average
interest rate
% per annum
2021
2020
1 year
2 years
3 years
4 years
5 years
Sensitivity analysis
1,476.9
1,601.0
1,767.9
1,742.8
907.1
2.99
2.89
2.54
2.53
4.00
2,601.7
2,241.4
2,287.6
2,555.4
2,530.8
3.52
3.16
2.58
2.30
2.29
Throughout the financial year, if interest rates on borrowings (based on the interest bearing liabilities and derivative financial
instruments in place at the end of the year) had been 100 basis points higher/lower, with all other variables held constant,
the profit attributable to Securityholders would have increased/decreased by A$0.2 million (2020: increased/decreased by
A$0.7 million) for Goodman and decreased/increased by A$5.0 million (2020: decreased/increased by A$2.6 million) for GIT.
(b) Liquidity risk
Liquidity risk is the risk that Goodman will not be able to meet its financial obligations as they fall due. Goodman’s objective
is to maintain sufficient liquidity to fund short-term working capital, capital expenditure, investment opportunities, debt expiries
and distributions. This is achieved through the monthly preparation of a three-year cash flow forecast to understand the uses
of funds and to identify potential shortfalls in funding or potential breaches of financial covenants in its loan arrangements.
This allows Goodman to plan for renewal of debt facilities, negotiation of new debt facilities, new issues of securities, including
the distribution reinvestment plan, and other potential sources of funding.
Goodman’s treasury function is responsible for reporting details of all debt maturities to the Board at its regular meetings.
Goodman seeks to spread its debt maturities such that the total debt repayable in a single financial year does not exceed
Board approved policy levels.
109
Goodman Group
Notes to the consolidated financial statements
Capital management (continued)
18 Financial risk management (continued)
The contractual maturities of financial liabilities are set out below:
Carrying
amount
Contractual
cash flows
Less than
1 year
1 – 2
year(s)
$M
$M
$M
$M
2 – 3
years
$M
3 – 4
years
$M
4 – 5
years
More than
5 years
$M
$M
Goodman
As at 30 June 2021
Non-derivative financial liabilities
Payables (excluding contract liabilities)
Lease liabilities
USD denominated notes, unsecured
1,133.8
1,625.3
EUR denominated notes, unsecured
Foreign private placement, unsecured
790.3
150.1
836.5
158.9
685.4
94.0
685.4
179.2
560.9
11.9
45.4
10.9
5.0
61.9
7.9
45.4
10.9
153.9
31.3
6.3
45.4
10.9
–
20.9
6.8
45.4
10.9
–
10.4
6.3
45.4
792.9
–
–
140.0
1,398.3
–
–
Total non-derivative
financial liabilities
Derivative financial
(assets)/liabilities – net
Net settled1
Gross settled2
(Inflow)
Outflow
Total derivative financial
(assets)/liabilities – net
As at 30 June 2020
Non-derivative financial liabilities
2,853.6
3,485.3
634.1
280.0
93.9
84.0
855.0
1,538.3
(18.9)
(17.8)
(36.8)
0.8
10.2
16.9
(1.2)
(7.7)
(138.7)
–
(570.0)
371.2
(82.9)
57.5
(78.0)
87.3
(176.1)
72.1
(77.1)
29.8
(75.7)
62.5
(80.2)
62.0
(157.6)
(216.6)
(62.2)
10.1
(93.8)
(30.4)
(14.4)
(25.9)
Payables (excluding contract liabilities)
656.1
656.1
Lease liabilities
Bank loans, unsecured3
46.8
50.0
56.3
50.0
572.2
17.6
–
50.3
11.3
–
USD denominated notes, unsecured
1,919.3
2,554.1
362.5
472.5
EUR denominated notes, unsecured
Foreign private placement, unsecured
815.9
168.3
883.1
185.0
19.7
6.9
11.2
5.6
16.8
4.5
–
49.4
11.2
172.5
11.2
2.2
50.0
49.4
11.2
–
5.6
1.5
–
49.4
11.2
–
–
19.2
–
1,570.9
818.6
–
Total non-derivative
financial liabilities
Derivative financial
(assets)/liabilities – net
Net settled1
Gross settled2
(Inflow)
Outflow
Total derivative financial
(assets)/liabilities – net
3,656.4
4,384.6
978.9
550.9
254.4
124.0
67.7
2,408.7
(124.8)
(127.9)
(55.1)
(35.9)
(20.2)
(0.6)
3.2
(19.3)
–
41.0
(495.7)
521.2
(72.0)
74.4
(93.9)
82.9
(74.3)
99.1
(152.2)
133.5
(34.2)
27.9
(69.1)
103.5
(83.8)
(102.4)
(52.7)
(46.9)
4.6
(19.3)
(3.1)
15.1
1. Net settled includes IRD and FEC.
2. Gross settled includes CCIRS.
3. Contractual cash flows relating to bank loans exclude any estimate of interest payments that might arise under Goodman’s revolving loan facilities.
110
Annual Report 2021
The contractual maturities of financial liabilities are set out below:
Carrying
amount
Contractual
cash flows
Less than
1 year
1 – 2
year(s)
$M
$M
$M
$M
2 – 3
years
$M
3 – 4
years
$M
4 – 5
years
More than
5 years
$M
$M
GIT
As at 30 June 2021
Non-derivative financial liabilities
Payables
839.8
839.8
USD denominated notes, unsecured
1,133.8
1,625.3
EUR denominated notes, unsecured
Foreign private placement, unsecured
790.3
150.1
836.5
158.9
607.6
45.4
10.9
5.0
–
45.4
10.9
153.9
95.9
45.4
10.9
–
9.2
45.4
10.9
–
123.3
45.4
792.9
–
3.8
1,398.3
–
–
2,914.0
3,460.5
668.9
210.2
152.2
65.5
961.6
1,402.1
(98.3)
(91.3)
(37.0)
(28.2)
(12.5)
(6.6)
(0.8)
(6.2)
(84.1)
–
(446.9)
303.7
(71.4)
56.3
(60.7)
84.1
(120.0)
67.2
(54.4)
28.6
(62.7)
36.9
(77.7)
30.6
(182.4)
(234.5)
(52.1)
(4.8)
(65.3)
(32.4)
(26.6)
(53.3)
Total non-derivative
financial liabilities
Derivative financial
(assets)/liabilities – net
Net settled1
Gross settled2
(Inflow)
Outflow
Total derivative financial
(assets)/liabilities – net
As at 30 June 2020
Non-derivative financial liabilities
Payables
Bank loans, unsecured3
886.8
50.0
886.8
50.0
655.3
127.0
–
–
USD denominated notes, unsecured
1,919.3
2,554.1
362.5
472.5
EUR denominated notes, unsecured
Foreign private placement, unsecured
815.9
168.3
883.1
185.0
19.7
6.9
11.2
5.6
–
–
49.4
11.2
172.5
–
50.0
49.4
11.2
–
–
–
49.4
11.2
–
104.5
–
1,570.9
818.6
–
Total non-derivative
financial liabilities
Derivative financial
(assets)/liabilities – net
Net settled1
Gross settled2
(Inflow)
Outflow
Total derivative financial
(assets)/liabilities – net
3,840.3
4,559.0
1,044.4
616.3
233.1
110.6
60.6
2,494.0
(143.4)
(145.1)
(54.5)
(35.5)
(23.4)
(6.8)
(6.5)
(18.3)
–
12.7
(444.2)
466.4
(65.2)
74.4
(85.8)
82.9
(64.8)
99.1
(140.7)
133.5
(22.4)
27.9
(65.4)
48.7
(130.7)
(122.9)
(45.3)
(38.4)
10.9
(14.0)
(1.0)
(35.0)
1. Net settled includes IRD and FEC.
2. Gross settled includes CCIRS.
3. Contractual cash flows relating to bank loans exclude any estimate of interest payments that might arise under Goodman’s revolving loan facilities.
111
Goodman Group
Notes to the consolidated financial statements
Capital management (continued)
18 Financial risk management (continued)
(c) Credit risk
Credit risk represents the loss that would be recognised if
counterparties failed to perform as contracted.
The maximum exposure to credit risk on financial assets,
excluding investments, which have been recognised on the
statement of financial position, is equal to the carrying amount.
Goodman has a policy of assessing the creditworthiness of all
potential customers and is not materially exposed to any one
customer. Goodman evaluates all customers’ perceived credit
risk and may require the lodgement of rental bonds or bank
guarantees, as appropriate, to reduce credit risk. In addition,
all rents are payable monthly in advance. Bank guarantees are
accepted from financial institutions which have an investment
grade credit rating from a major rating agency.
Concentration of credit risk may exist due to receivables
in respect of the disposals of investment properties. The
credit risk is minimised as legal title to the properties is only
transferred upon receipt of proceeds and typically Goodman
will have either received a cash deposit or be the beneficiary
of a bank guarantee for 10% to 20% of the total proceeds.
In relation to material bank deposits, Goodman minimises credit
risk by dealing with major financial institutions. The counterparty
must have a long-term investment grade credit rating from a
major rating agency. The amounts and other terms associated
with bank deposits are formally reviewed monthly.
The credit risks associated with derivative financial
instruments are managed by:
+
+
Transacting with multiple derivatives counterparties that
have a long-term investment grade credit rating
Utilising International Swaps and Derivatives Association
(ISDA) agreements with derivative counterparties in
order to limit exposure to credit risk through netting of
amounts receivable and amounts payable to individual
counterparties (refer below)
+
Formally reviewing the mark to market position of
derivative financial instruments by counterparty on a
monthly basis.
Master netting off or similar agreements
Goodman enters into derivative transactions under ISDA
master netting off agreements. Under these agreements, where
certain credit events occur (such as a default), all outstanding
transactions under the agreement are terminated and a single
net termination value is payable in full and final settlement.
As Goodman does not have any current legally enforceable
right to offset, the fair values associated with derivative
financial instruments have been presented gross in the
statement of financial position. However, if a credit event
occurred, the ISDA master netting off agreement would allow
A$175.2 million (2020: A$294.7 million) and
A$112.9 million (2020: A$291.9 million) of financial assets
and financial liabilities in relation to Goodman’s and GIT’s
respective derivative financial instruments to be offset.
112
Annual Report 2021
(d) Fair values of financial instruments
The carrying amounts shown in the statement of financial position and fair values of financial assets and liabilities are as follows:
Goodman
GIT
Carrying
amount
Fair
value
Carrying
amount
Note
2021
$M
2021
$M
2020
$M
Fair
value
2020
$M
Carrying
amount
Fair
value
Carrying
amount
2021
$M
2021
$M
2020
$M
Fair
value
2020
$M
Financial assets
Cash and cash equivalents
Receivables
Other financial assets:
–
IRD
– CCIRS
–
–
FEC
Investments in unlisted securities
Financial liabilities
Payables
Interest bearing liabilities1
Other financial liabilities:
–
IRD
– CCIRS
–
FEC
21(a)
7
17
10
16
17
920.4
608.8
114.3
256.7
–
8.3
920.4
608.8
114.3
256.7
–
8.3
1,781.9
1,781.9
379.8
379.8
1,302.6
1,302.6
390.6
390.6
3,344.6
3,344.6
3,089.5
3,089.5
160.3
231.5
73.3
3.0
160.3
231.5
73.3
3.0
111.9
194.7
2.3
22.0
111.9
194.7
2.3
22.0
158.3
231.5
93.9
19.7
158.3
231.5
93.9
19.7
1,908.5
1,908.5
2,640.6
2,640.6
4,055.3
4,055.3
4,895.5
4,895.5
685.4
685.4
656.1
656.1
839.8
839.8
886.8
886.8
2,060.3
2,236.3
2,938.5
3,083.1
2,062.8
2,236.3
2,939.5
3,083.1
3,202.6
1. The fair value of certain fixed rate interest bearing liabilities has been determined by reference to the quoted market prices at 30 June 2021.
4,120.6
3,976.0
2,959.1
3,029.1
3,135.1
15.9
118.0
79.5
15.9
118.0
79.5
35.5
277.1
68.8
35.5
277.1
68.8
15.9
110.6
–
15.9
110.6
–
35.5
35.5
268.9
268.9
48.6
48.6
4,179.3
4,322.9
Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method:
Goodman
GIT
Level 1
$M
Level 2
$M
Level 3
$M
Total
$M
Level 1
$M
Level 2
$M
Level 3
$M
Total
$M
As at 30 June 2020
Derivative financial assets
Investment in unlisted securities
Derivative financial liabilities
As at 30 June 2020
Derivative financial assets
Investment in unlisted securities
Derivative financial liabilities
–
–
–
–
–
–
–
–
–
–
371.0
–
371.0
213.4
213.4
465.1
–
465.1
381.4
381.4
–
8.3
8.3
–
–
–
3.0
3.0
–
–
371.0
8.3
379.3
213.4
213.4
465.1
3.0
468.1
381.4
381.4
–
–
–
–
–
–
–
–
–
–
308.9
–
308.9
126.5
126.5
483.7
–
483.7
353.0
353.0
–
22.0
22.0
–
–
–
19.7
19.7
–
–
There were no transfers between the levels during the year.
308.9
22.0
330.9
126.5
126.5
483.7
19.7
503.4
353.0
353.0
113
Goodman Group
Notes to the consolidated financial statements
Capital management (continued)
18 Financial risk management (continued)
Valuation techniques used to derive
Level 2 and Level 3 fair values
The Level 2 derivative financial instruments held by Goodman
and GIT consist of IRD, CCIRS and FEC.
The fair values of derivative financial instruments are
determined using generally accepted pricing models which
discount estimated future cash flows based on the terms and
maturity of each contract and current market interest rates
and/or foreign currency rates, adjusted for specific features of
the instruments.
19. Dividends and distributions
Dividends and distributions are recognised when they are
declared and before deduction of any withholding tax. Any
non-recoverable withholding tax is included in income tax.
Goodman
FY21 dividends/distributions
Dividends/distributions
cents per security
Total
amount
$M
Date of
payment
GL
GIT
– 31 Dec 2020
– 30 Jun 2021
GLHK
–
–
n/a
15.00
9.00
6.00
30.00
25 Feb 2021
26 Aug 2021
26 Aug 2021
277.1
166.3
110.8
554.2
FY20 dividends/distributions
Dividends/distributions
cents per security
Total
amount
$M
Date of
payment
–
–
n/a
15.00
11.00
4.00
30.00
25 Feb 2020
28 Aug 2020
28 Aug 2020
274.3
201.1
73.1
548.5
GL
GIT
– 31 Dec 2019
– 30 Jun 2020
GLHK
GIT
In FY21, GIT’s distributions were 24.0 cents per security
(2020: 26.0 cents per security) amounting to $443.4 million
(2020: $475.4 million).
Movement in provision for dividends/distributions
to Securityholders
Goodman
2021
$M
2020
$M
GIT
2021
$M
2020
$M
274.3
272.1
201.1
181.4
554.2
548.5
443.4
475.4
Balance at the beginning
of the year
Provisions for
dividends/distributions
Dividends/distributions paid
(551.4)
(546.3)
(478.2)
(455.7)
Balance at the
end of the year
277.1
274.3
166.3
201.1
114
Annual Report 2021
20. Issued capital
(a) Ordinary securities
Ordinary securities are classified as equity. Incremental costs directly attributable to issues of ordinary securities are recognised
as a deduction from equity, net of any tax effects.
Stapled securities – issued and fully paid
1,847,429,255
1,828,413,236
8,257.3
8,192.2
7,997.7
7,772.0
2021
2020
Number of securities
Goodman
2021
$M
2020
$M
GIT
2021
$M
2020
$M
Less: Accumulated issue costs
Total issued capital
Terms and conditions
(160.9)
(160.5)
(148.7)
(148.5)
8,096.4
8,031.7
7,849.0
7,623.5
Stapled security means one share in the Company stapled to one unit in the Trust and one CDI over a share in GLHK. Holders of
stapled securities are entitled to receive dividends or distributions as declared from time to time and are entitled to one vote per
security at Securityholders’ meetings. In the event of a winding up, Securityholders rank after creditors and are fully entitled to any
net proceeds of liquidation.
Movement in ordinary securities
Date
Details
30 Jun 2019
Balance before accumulated issue costs
31 Aug 2019
Securities issued to employees under the LTIP
30 Jun 2020
Balance before accumulated issue costs
31 Aug 2020
Securities issued to employees under the LTIP
4 Sep 2020
Issue of securities
Less: Accumulated issue costs
30 Jun 2021
Closing balance
(b) Share based payments
LTIP
Number of
securities
Goodman
$M
GIT
$M
1,813,881,995
8,192.2
7,625.8
14,531,241
–
146.2
1,828,413,236
8,192.2
7,772.0
15,438,241
3,577,778
–
65.1
(160.9)
183.2
42.5
(148.7)
1,847,429,255
8,096.4
7,849.0
The Group’s share based payments primarily relate to performance rights awarded to employees under the LTIP. These performance
rights entitle an employee to either acquire Goodman securities for $nil consideration (equity settled performance rights) or, in
certain jurisdictions, to receive an amount in cash equal to the value of the securities (cash settled performance rights), subject to
the vesting conditions having been satisfied. Further details regarding the vesting conditions are included in the remuneration report
section of the Directors’ report.
During the year, the movement in the number of equity settled and cash settled performance rights under the LTIP was as follows:
Outstanding at the beginning of the year
Granted
Exercised
Forfeited
Outstanding at the end of the year
Exercisable at the end of the year
Number of rights
2021
2020
73,987,645
79,062,163
16,079,977 14,435,282
(19,016,019)
(17,969,122)
(2,410,883)
(1,540,678)
68,640,720
73,987,645
–
–
115
Goodman Group
Notes to the consolidated financial statements
Capital management (continued)
20 Issued capital (continued)
(b) Share based payments (cont)
Share based payments transactions
The fair value of equity settled performance rights at the
grant date is expensed with a corresponding increase in the
employee compensation reserve over the period from the
grant date to the vesting dates. The expense is adjusted to
reflect the actual number of performance rights for which
the related service and non-market vesting conditions are
expected to be met. The accumulated share based payments
expense of performance rights which have vested or lapsed
is transferred from the employee compensation reserve to
retained earnings.
The fair value of cash settled performance rights is also
recognised as an expense but with a corresponding increase
in liabilities over the vesting period. The expense is adjusted
to reflect the actual number of performance rights for which
the related service and non-market vesting conditions are
expected to be met. The liability is remeasured at each
reporting date and at the vesting date based on the fair value
of the rights.
The fair value of services received in return for performance
rights granted under the LTIP is measured by reference to the
fair value of the performance rights granted. The fair value of
the performance rights granted during the year was measured
as follows:
+
+
Operating EPS tranche: these rights were valued as a
granted call option, using the standard Black Scholes
model with a continuous dividend/distribution yield
Relative TSR tranche: these rights were valued using a
Monte Carlo model which simulated total returns for each
of the ASX 100 stocks and discounted the future value of
any potential future vesting performance rights to arrive
at a present value. The model uses statistical analysis to
forecast total returns, based on expected parameters of
variance and co-variance.
The model inputs for performance rights, both equity and
cash settled, awarded during the current financial year included
the following:
Rights issued on
19 Nov 2020
Rights issued on
30 Sep 2020
Fair value at
measurement date ($)
Security price ($)
Exercise price ($)
Expected volatility (%)
Rights' expected weighted
average life (years)
Dividend/distribution
yield per annum (%)
Average risk free rate of
interest per annum (%)
16.07
18.68
–
28.08
3.8
1.61
0.21
15.77
17.49
–
27.21
3.9
1.67
0.25
The amounts recognised as an expense are set out in note 2.
At 30 June 2021, a liability of $158.0 million (2020: $91.0 million)
was recognised in relation to cash settled performance rights.
Goodman’s New Zealand Long Term Incentive Plan
Under Goodman’s New Zealand Long Term Incentive Plan,
employees receive approximately half of their LTI in the form
of performance rights over GMT units that vest subject to
meeting performance hurdles based on the achievement of
distributable earnings targets by GMT and the relative total
unitholder return from holding GMT units compared to other
NZX property vehicles. On vesting, delivery of units in GMT
is made from units held by Goodman or acquired on-market.
116
Annual Report 2021
OTHER ITEMS
The notes in this section set out other information that is required to be disclosed to comply with the
Australian Accounting Standards, Corporations Act 2001 or Corporations Regulations.
21. Notes to the cash flow statements
(a) Reconciliation of cash
For the purpose of the cash flow statements, cash and cash equivalents includes cash on hand at the bank and short-term
deposits at call. Cash at the end of the year as shown in the cash flow statements is reconciled to the related items in the
statements of financial position as follows:
Note
Bank balances
Call deposits
Cash classified as assets held for sale
9
Goodman
2021
$M
853.7
66.7
920.4
–
920.4
2020
$M
1,128.8
653.1
1,781.9
10.9
1,792.8
GIT
2021
$M
313.1
66.7
379.8
2020
$M
649.5
653.1
1,302.6
379.8
1,302.6
(b) Reconciliation of profit for the year to net cash provided by operating activities
Profit for the year
Items classified as investing activities
Net gain on disposal of investment properties
Net gain on disposal of equity investments
Non-cash items
Amortisation and depreciation
Share based payments expense
Net gain from fair value adjustments on investment properties
Reversal of previous impairments
Goodman
2021
$M
2,311.9
(37.7)
(5.0)
23.0
266.9
(63.1)
–
2020
$M
1,504.1
(54.5)
(0.6)
22.5
156.1
(45.2)
–
Share of net results of equity accounted investments
(1,708.9)
(1,022.2)
Net finance expense/(income)
Income tax expense
Changes in assets and liabilities during the year:
–
–
–
–
–
(Increase)/decrease in receivables
(Increase)/decrease in inventories
(Increase)/decrease in other assets
Increase/(decrease) in payables
(Decrease)/increase in provisions
Distributions/dividends received from Partnerships
Net finance costs paid
Net income taxes (paid)/received
(74.9)
108.1
820.3
(146.7)
(29.9)
(6.0)
6.7
(0.1)
644.3
536.9
(25.1)
(41.4)
80.2
113.0
753.4
259.2
(207.0)
3.9
45.3
4.8
859.6
461.0
(87.4)
(76.3)
Net cash provided by operating activities
1,114.7
1,156.9
GIT
2021
$M
1,574.8
(39.3)
(3.2)
–
–
(60.2)
(17.6)
(1,373.8)
(135.5)
49.5
(5.3)
1.7
–
(2.2)
1.8
–
(4.0)
372.6
(29.5)
0.5
339.6
2020
$M
836.1
(9.1)
(0.1)
–
–
(36.5)
–
(825.5)
24.1
11.1
0.1
0.2
0.6
2.5
(0.4)
–
3.0
234.0
(98.5)
(3.2)
135.3
117
Goodman Group
Notes to the consolidated financial statements
Other items (continued)
21 Notes to the cash flow statements (continued)
(c) Non-cash transactions
During the current and prior financial years, other than disclosed elsewhere in the consolidated financial statements, there were
no significant non-cash transactions.
(d) Reconciliation of liabilities arising from financing activities
Derivative
financial
instruments
$M
Provision for
distributions
$M
Lease
liabilities
$M
(90.5)
272.1
Interest
bearing
liabilities
$M
2,975.0
–
50.0
(117.1)
–
–
(67.1)
48.8
(18.2)
–
–
–
–
–
–
(0.9)
–
–
(0.9)
(1.8)
9.4
–
–
–
–
2,938.5
(83.7)
200.0
(891.9)
–
–
(691.9)
(195.8)
(25.7)
–
0.6
–
34.6
–
35.2
4.6
–
–
–
4.6
5.4
(83.9)
–
–
–
–
–
–
2,060.3
(157.6)
–
–
–
–
(546.3)
(546.3)
–
–
–
–
548.5
548.5
274.3
–
–
–
(551.4)
(551.4)
–
–
–
–
–
–
554.2
554.2
277.1
Total
$M
3,156.6
75.4
50.0
(118.0)
(17.7)
(546.3)
(632.0)
47.0
(8.8)
1.3
(12.2)
548.5
537.6
3,175.9
204.6
(891.9)
(17.8)
(551.4)
–
75.4
–
–
(17.7)
–
(17.7)
–
–
1.3
(12.2)
–
(10.9)
46.8
–
–
(17.8)
–
(17.8)
(1,256.5)
–
–
64.2
–
0.8
–
–
65.0
94.0
(190.4)
(109.6)
64.2
0.6
0.8
34.6
554.2
654.4
2,273.8
Goodman
Balance at 30 June 2019
Impact of adopting AASB 16 on 1 July 2019
Proceeds from borrowings
Payments on borrowings and derivative financial instruments
Payment of lease liabilities
Distributions paid
Total changes from financing cash flows
Effect of changes in foreign exchange rates
Changes in fair value
Other changes
Interest expense on lease liabilities
Other movements
Distributions declared
Total other changes
Balance at 30 June 2020
Changes from financing cash flows
Proceeds from borrowings and derivative financial instruments
Payments on borrowings and derivative financial instruments
Payment of lease liabilities
Distributions paid
Total changes from financing cash flows
Effect of changes in foreign exchange rates
Changes in fair value
Other changes
New leases
Other borrowing costs
Interest expense on lease liabilities
Debt modification costs
Distributions declared
Total other changes
Balance at 30 June 2021
118
Interest
bearing
liabilities
$M
Derivatives
used for
hedging
$M
Provision for
distributions
$M
Loans with
related
parties, net
$M
2,864.3
(133.4)
181.4
(2,569.2)
GIT
Balance at 1 July 2019
Changes from financing cash flows
Net cash flows from loans to related parties
Proceeds from borrowings
Payments on borrowings and
derivative financial instruments
Distributions paid
Total changes from financing cash flows
Effect of changes in foreign exchange rates
Changes in fair value
Other changes
Issue of units under the LTIP
Equity settled share based payments transactions
Interest income
Interest expense
Interest paid
Other borrowing costs
Distributions declared
Total other changes
–
50.0
–
–
50.0
41.3
(18.3)
–
–
–
–
–
2.2
–
2.2
–
–
(0.9)
–
(0.9)
(2.4)
6.0
–
–
–
–
–
–
–
–
Balance at 30 June 2020
2,939.5
(130.7)
Changes from financing cash flows
Net cash flows from loans to related parties
Proceeds from borrowings and derivative
financial instruments
Payments on borrowings and
derivative financial instruments
Distributions paid
Total changes from financing cash flows
Effect of changes in foreign exchange rates
Changes in fair value
Other changes
Issue of units under the LTIP
Equity settled share based payments transactions
Interest income
Interest expense
Interest paid
Other borrowing costs
Debt modification costs
Distributions declared
Total other changes
Balance at 30 June 2021
–
200.0
(891.9)
–
(691.9)
(195.4)
(25.8)
–
–
–
–
–
2.1
34.3
–
36.4
–
46.8
–
–
46.8
5.5
(104.0)
–
–
–
–
–
–
–
–
–
2,062.8
(182.4)
–
–
–
(455.7)
(455.7)
–
–
–
–
–
–
–
–
475.4
475.4
201.1
–
–
–
(478.2)
(478.2)
–
–
–
–
–
–
–
–
–
443.4
443.4
166.3
Annual Report 2021
Total
$M
343.1
511.7
50.0
(0.9)
(455.7)
105.1
57.2
(12.3)
(146.2)
(13.6)
(123.2)
9.5
(6.5)
2.2
475.4
197.6
690.7
25.1
246.8
(891.9)
(478.2)
(1,098.2)
(193.9)
(130.0)
511.7
–
–
–
511.7
18.3
–
(146.2)
(13.6)
(123.2)
9.5
(6.5)
–
–
(280.0)
(2,319.2)
25.1
–
–
–
25.1
(4.0)
(0.2)
(183.2)
(183.2)
(13.7)
(69.1)
11.7
(6.9)
–
–
–
(261.2)
(2,559.5)
(13.7)
(69.1)
11.7
(6.9)
2.1
34.3
443.4
218.6
(512.8)
119
Goodman Group
Notes to the consolidated financial statements
Other items (continued)
22. Equity attributable to Goodman Limited and non-controlling interests
Under Australian Accounting Standards, stapled entities are required to separately identify equity attributable to the parent entity
from equity attributable to other entities stapled to the parent. The equity attributable to other entities stapled to the parent is
presented as non-controlling interests in the statement of financial position of the Group. The tables below in notes 22(a) and 22(b)
provide an analysis of equity, profit for the year and total comprehensive income for the year attributable to each of Goodman Limited
and the other entities stapled to Goodman Limited (non-controlling interests).
(a) Equity attributable to Goodman Limited
Attributable to Goodman Limited
Foreign
currency
translation
reserve
$M
Employee
compensation
reserve
$M
Defined
benefit
retirement
schemes
reserve
Issued
capital
$M
Total
reserves
$M
Retained
earnings
$M
Total
$M
Goodman
Balance at 30 June 2019
483.2
(2.7)
28.3
(23.3)
2.3
450.7
936.2
Total comprehensive
(loss)/income for the year
Profit for the year
Other comprehensive
(loss)/income
Effect of foreign
currency translation
Total comprehensive
(loss)/income for the year,
net of income tax
Transfers
Contributions by and
distributions to owners
Purchase of securities for the LTIP
Equity settled share based
payments transactions
–
–
–
–
–
–
–
(34.2)
(34.2)
–
–
–
Balance at 30 June 2020
483.2
(36.9)
Total comprehensive
(loss)/income for the year
Profit for the year
Other comprehensive
(loss)/income
Effect of foreign
currency translation
Total comprehensive
(loss)/income for the year,
net of income tax
Transfers
Contributions by and
distributions to owners
Purchase of securities for the LTIP
Issue of securities
Issue costs
Equity settled share based
payments transactions
Deferred tax associated
with the LTIP
Transfer to payables
–
–
–
–
–
11.4
(0.1)
–
–
–
–
(28.6)
(28.6)
–
–
–
–
–
–
–
Balance at 30 June 2021
494.5
(65.5)
120
–
–
–
(55.3)
(19.1)
79.2
33.1
–
–
–
(68.4)
(22.4)
–
–
106.1
8.1
(17.1)
39.4
–
–
–
–
–
–
(23.3)
–
–
–
–
–
–
–
–
(23.3)
–
315.9
315.9
(34.2)
–
(34.2)
(34.2)
(55.3)
(19.1)
79.2
(27.1)
315.9
55.3
281.7
–
–
–
(19.1)
79.2
821.9
1,278.0
–
300.2
300.2
(28.6)
–
(28.6)
(28.6)
(68.4)
300.2
68.4
271.6
–
(22.4)
11.4
(0.1)
106.1
8.1
(17.1)
(22.4)
–
–
106.1
8.1
(17.1)
(49.4)
–
–
–
–
–
–
1,190.5
1,635.6
Annual Report 2021
(b) Equity attributable to other entities stapled to Goodman Limited (non-controlling interests)
Attributable to other entities stapled to Goodman Limited (non-controlling interests)
Asset
revaluation
reserve
Cash
flow
hedge
reserve
Foreign
currency
translation
reserve
Employee
compensation
reserve
Defined
benefit
retirement
schemes
reserve
$M
(7.1)
$M
(3.3)
$M
217.7
$M
187.9
$M
–
Issued
capital
$M
7,548.5
Total
reserves
Retained
earnings
$M
$M
Total
$M
395.2
1,642.6
9,586.3
Balance at 1 July 2019
Total comprehensive
(loss)/income for the year
Profit for the year
Other comprehensive
(loss)/income
Effect of foreign
currency translation
Actuarial losses on defined
benefit superannuation funds
Other changes
Total comprehensive
(loss)/income for the year,
net of income tax
Contributions by and
distributions to owners
Dividends/distributions
on stapled securities
Equity settled share based
payments transactions
–
–
–
–
–
–
–
–
–
–
(0.1)
(0.2)
7.8
–
–
–
(1.7)
–
–
(0.1)
(1.9)
7.8
–
–
–
–
–
–
Balance at 30 June 2020
7,548.5
(7.2)
(5.2)
225.5
Total comprehensive
(loss)/income for the year
Profit for the year
Other comprehensive
income/(loss)
Effect of foreign
currency translation
Actuarial losses on defined
benefit superannuation funds
Other changes
Total comprehensive
income/(loss) for the year,
net of income tax
Contributions by and
distributions to owners
Dividends/distributions
on stapled securities
Issue of securities
Issue costs
Equity settled share based
payments transactions
–
–
–
–
–
–
53.7
(0.3)
–
–
–
–
0.2
–
0.3
0.5
–
0.3
(250.7)
–
–
0.5
0.8
(250.7)
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 30 June 2021
7,601.9
(6.7)
(4.4)
(25.2)
–
–
–
–
–
–
18.8
206.7
–
–
–
–
–
–
–
–
28.6
235.3
–
–
1,188.2
1,188.2
0.2
7.7
(8.2)
–
(8.2)
(1.7)
–
–
–
7.7
(8.2)
(1.7)
(8.0)
(2.2)
1,188.2
1,186.0
–
–
–
(548.5)
(548.5)
18.8
–
18.8
(8.0)
411.8
2,282.3 10,242.6
–
–
2,011.7
2,011.7
(0.8)
(250.8)
(6.0)
–
(6.0)
0.6
–
–
–
(250.8)
(6.0)
0.6
(6.8)
(256.2)
2,011.7
1,755.5
–
–
–
–
–
–
–
28.6
(554.2)
(554.2)
–
–
–
53.7
(0.3)
28.6
(14.8)
184.2
3,739.8
11,525.9
121
Goodman Group
Notes to the consolidated financial statements
Other items (continued)
23. Controlled entities
Controlled entities are entities controlled by the Company. Under Australian Accounting Standards, the Company is identified
as having acquired control over the assets of the Trust and GLHK. The consolidated financial statements incorporate the assets
and liabilities of all controlled entities as at 30 June 2021 and the results of all such entities for the year ended 30 June 2021.
Where an entity either began or ceased to be controlled during the financial year, the results of that entity are included only from
or to the date control commenced or ceased.
Unrealised gains and losses and inter-entity balances resulting from transactions with or between controlled entities are
eliminated in full on consolidation.
The significant controlled entities of the Company are set out below:
Significant controlled entities of Goodman Limited
Country of establishment/incorporation
Clayton 3 Trust
GA Industrial Portfolio Trust
GIT Investments Holding Trust No.31
Goodman Australia Finance Pty Limited1
Goodman Capital Trust1
Goodman Europe Development Trust1
Goodman Finance Australia Trust1
Goodman Funds Management Australia Limited
Goodman Funds Management Limited
Goodman Industrial Funds Management Limited
Goodman Industrial Trust
Goodman Property Services (Aust) Pty Limited
Goodman Treasury Trust1
Homebush Subtrust1
Moorabbin Airport Corporation Pty Ltd
Goodman Belgium NV
Goodman Management Services (Belgium) NV
Goodman China Asset Management Limited
Goodman China Developments
Goodman Developments Asia
Goodman Management Consulting (Beijing) Co. Ltd
Goodman Management Consulting (Shanghai) Co. Ltd
Goodman France Sàrl
Goodman Germany GmbH
GFM Hong Kong Limited
Goodman Asia Limited
Goodman China Limited
Goodman Hong Kong Investment Trust
Goodman Logistics (HK) Limited
Goodman UK Investment (HK) Limited
GPS Hong Kong Limited
Goodman Italy S.R.L.
122
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Belgium
Belgium
Cayman Islands
Cayman Islands
Cayman Islands
China
China
France
Germany
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Italy
Annual Report 2021
Significant controlled entities of Goodman Limited
Country of establishment/incorporation
Goodman Japan Funds Limited
Goodman Japan Limited
Goodman Finance (Jersey) Limited1
GELF Management (Lux) Sàrl
Goodman Artemis Logistics (Lux) Sàrl
Goodman Finance (Lux) Sàrl1
Goodman Finance Two (Lux) Sàrl1
Goodman Management Holdings (Lux) Sàrl
Goodman Meadow Logistics (Lux) Sàrl
Goodman Midnight Logistics (Lux) Sàrl
Goodman Property Opportunities (Lux) Sàrl, SICAR
GPO Advisory (Lux) Sàrl
Goodman Finance NZ Limited1
Goodman Investment Holdings (NZ) Limited
Goodman (NZ) Limited
Goodman Property Services (NZ) Limited
Goodman Galaxy Holding BV
Goodman Netherlands BV
Goodman Real Estate (Spain) S.L.
Goodman Logistics Developments (UK) Limited
Goodman Real Estate Adviser (UK) Limited
Goodman Real Estate (UK) Limited
Goodman Development Management LLC
Goodman Management USA Inc
Goodman North America LLC
Goodman North America Management LLC
Goodman US Finance One, LLC1
Goodman US Finance Two, LLC1
Goodman US Finance Three, LLC1
Goodman US Finance Four, LLC1
Tarpon Properties REIT Inc1
1. Significant controlled entities of Goodman Industrial Trust.
Japan
Japan
Jersey
Luxembourg
Luxembourg
Luxembourg
Luxembourg
Luxembourg
Luxembourg
Luxembourg
Luxembourg
Luxembourg
New Zealand
New Zealand
New Zealand
New Zealand
The Netherlands
The Netherlands
Spain
United Kingdom
United Kingdom
United Kingdom
United States
United States
United States
United States
United States
United States
United States
United States
United States
123
Goodman Group
Notes to the consolidated financial statements
Other items (continued)
24. Related parties
The names of key management personnel of Goodman at any time during the financial year are as follows:
Non-Executive Directors – GL and GFML
Stephen Johns
Ian Ferrier, AM (retired on 19 November 2020)
Christopher Green
Mark Johnson
Rebecca McGrath
Phillip Pryke
Penny Winn
Non-Executive Directors – GLHK
David Collins
Executive KMP
Gregory Goodman
Danny Peeters
Anthony Rozic
Nick Kurtis
Michael O'Sullivan
Nick Vrondas
Remuneration of key management personnel
The key management personnel remuneration totals are as follows:
Short-term employee benefits
Post-employment benefits
Equity compensation benefits
Long-term employee benefits
Goodman
Goodman Limited1
2021
$000
7,523.5
225.4
33,385.0
3,813.8
44,947.7
2020
$000
7,693.9
211.8
27,760.3
3,787.7
39,453.7
2021
$000
2020
$000
–
–
–
–
–
–
–
–
–
–
1. The remuneration is paid by wholly owned controlled entities of Goodman Limited.
GIT does not employ personnel in its own right. However, it is required to have an incorporated responsible entity to manage its
activities and GFML is considered to be the key management personnel of GIT.
Individual Directors’ and executives’ compensation disclosures
Information regarding individual Directors’ and executives’ compensation and some equity instruments disclosures as required
by Corporations Regulations 2M.3.03 is provided in the remuneration report section of the Directors’ report.
GreenPoint Real Estate Innovation and Technology Venture, LP
On 16 July 2020, GIT committed to investing USD15.0 million in GreenPoint Real Estate Innovation and Technology Venture,
LP, a property technology fund that is a Delaware limited partnership, managed by Greenpoint Group LP, also a Delaware limited
partnership. Greenpoint Group LP is beneficially owned and controlled by Christopher Green, a Director of Goodman Limited.
As at 30 June 2021, GIT has invested USD3,826,595.
Transactions with associates and JVs
The transactions with Partnerships during the financial year were as follows:
Revenue from disposal of
investment properties
Revenue from management
and development activities
Interest charged on loans
to associates and JVs
2021
$000
2020
$000
163,046.2
56,900.7
–
163,046.2
–
–
–
–
2021
$000
712,234.5
442,607.0
2020
$000
883,521.8
261,195.5
2021
$000
–
2020
$000
–
8,131.9
1,319.8
–
–
–
–
15.7
7,417.6
–
–
Goodman
Associates
JVs
GIT
Associates
JVs
124
Annual Report 2021
In addition to the transactions included above, as at 30 June 2021, the Group had entered into conditional contractual
arrangements to sell two properties to a Partnership for consideration of $109.7 million. As the conditions under the contracts
had not been satisfied as at 30 June 2021, the disposal transactions were not reflected in the Group’s FY21 results.
Amounts due from Partnerships at 30 June 2021 were as follows:
Goodman
GIT
Amounts due from
related parties1
2021
$000
2020
$000
Loans provided
by Goodman2
2021
$000
2020
$000
Amounts due from
related parties1
Loans provided
by GIT2
2021
$000
2020
$000
2021
$000
2020
$000
Associates
GAIP
GAP
GMT
GHKLP
GJCP
GEP
JVs
GCLP
Other JVs
10,811.2
10,850.4
3,843.9
2,123.8
3,633.8
1,540.4
41,987.7
56,779.4
3,017.4
8,454.0
5,352.0
16,526.1
70,238.0
94,682.1
12,566.5
20,360.9
–
–
–
–
–
–
–
–
–
–
–
–
–
3,616.0
3,616.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
18,803.7
31,370.2
17,353.5
270,368.8
130,296.1
37,714.4
270,368.8
130,296.1
70.5
70.5
263.2
240,731.6
69,498.4
263.2
240,731.6
69,498.4
1. Amounts due from related parties include contract assets arising from transactions with related parties.
2. Loans provided by Goodman and GIT to associates and JVs have been provided on an arm’s length basis.
Transactions between GIT and other Goodman entities
The transactions with other Goodman entities during the financial year were as follows:
Management income
Revenue from disposal of investment properties
Reimbursement of expenses
GIT
2021
$000
2,384.0
8,073.0
50,392.9
60,849.9
2020
$000
2,379.0
–
52,479.8
54,858.8
In addition, interest bearing loans exist between GIT and other Goodman entities. At 30 June 2021, interest bearing loans of
$3,096.5 million (2020: $3,008.0 million) were receivable by GIT from other Goodman entities and $777.7 million (2020: $760.0
million) was payable by GIT to other Goodman entities. Loans to related Goodman entities bear interest at rates referenced to
GIT’s external funding arrangements.
125
Goodman Group
Notes to the consolidated financial statements
Other items (continued)
25. Commitments
Development activities
At 30 June 2021, Goodman was committed to expenditure
in respect of $534.7 million (2020: $251.8 million) on
inventories and other development activities. GIT has no such
commitments (2020: $nil).
Investment properties
At 30 June 2021, Goodman had contracted to acquire
an investment property for $67.7 million. In the prior year,
Goodman had capital expenditure commitments of $32.2
million in respect of its existing investment property portfolio.
GIT has no such commitments (2020: $nil).
Partnerships
At 30 June 2021, Goodman had remaining equity commitments
of $63.0 million (2020: $65.1 million) into GEP and $144.7 million
(2020: $nil) into GAIP. These commitments also apply to GIT.
In relation to GEP, Goodman offers limited liquidity facilities to
investors, which allow the investors to sell to Goodman some
or all of their investment in GEP. Limits apply to these liquidity
facilities and Goodman is only required to offer to purchase
up to €50 million of the issued capital of GEP each half year
subject to 1) a maximum of €50 million in any calendar year;
and 2) a cumulative maximum of €150 million. Furthermore,
Goodman is only required to purchase units where its co-
investment in GEP is either below a prescribed limit or a
maximum amount of liquidity has been provided. Currently,
Goodman’s interest in GEP is below the prescribed limit and
the liquidity facility is open for investors. The commitment
under the liquidity facility also applies to GIT.
Furthermore, in respect of certain Partnerships, Goodman
and its investment partners have committed to invest further
capital, subject to the approval by the partners of the property
acquisitions and/or developments for which the funding
is required. Goodman’s commitment in respect of these
Partnerships is set out below:
+
$nil (2020: $23.8 million) into KGIP
+ $136.2 million (2020: $147.8 million) into KGG
+ $410.1 million (2020: 436.6 million) into GJDP
+ $808.0 million (2020: $853.8 million) into GCLP
+ $512.8 million (2020: $136.8 million) into GUKP
+ $2,156.2 million (2020: $2,546.8 million) into GNAP
+ $72.7 million (2020: $84.4 million) into
Goodman Brazil Logistics Partnership.
126
26. Auditors’ remuneration
Audit services
Auditor of the Company:
–
–
Audit and review of financial reports (KPMG Australia)
Audit and review of financial reports (overseas KPMG firms)
Other services
– Other regulatory services (KPMG Australia)
– Other advisory services (KPMG Australia)
– Other advisory services (overseas KPMG firms)
–
–
–
–
Taxation compliance services (KPMG Australia)
Taxation compliance services (overseas KPMG firms)
Taxation advice (KPMG Australia)
Taxation advice (overseas KPMG firms)
Total paid/payable to KPMG
Other auditors
Goodman
2021
$000
2020
$000
1,161.9
1,127.9
2,289.8
1,043.8
898.4
1,942.2
56.7
–
18.2
100.0
196.3
23.0
338.5
732.7
53.8
80.7
–
123.4
189.2
190.8
257.0
894.9
3,022.5
2,837.1
Annual Report 2021
GIT
2021
$000
691.9
85.8
777.7
2020
$000
624.5
73.2
697.7
35.7
53.8
–
–
91.7
–
–
–
127.4
905.1
–
–
96.3
35.3
–
1.6
187.0
884.7
–
Audit and review of financial reports (non-KPMG firms)
163.4
125.9
–
–
27. Parent entity disclosures
As at, and throughout the financial year ended, 30 June 2021, the parent entities of Goodman and GIT were Goodman Limited and
Goodman Industrial Trust respectively. The financial information for the parent entities is disclosed as follows:
Goodman
GIT
Result of the parent entity
Profit/(loss) for the year
Other comprehensive income for the year
Total comprehensive income/(loss) for the year
Financial position of the parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent entity comprising:
Issued capital
Profits reserve
Employee compensation reserve
Accumulated losses
Total equity
2021
$M
63.0
–
63.0
49.1
1,591.9
164.4
1,163.7
852.5
90.7
39.3
(554.3)
428.2
2020
$M
(91.4)
–
(91.4)
53.8
1,570.7
362.7
1,272.2
792.0
90.7
33.1
(617.3)
298.5
2021
$M
140.0
–
140.0
2,329.3
7,424.8
1,107.4
2,666.1
2020
$M
322.0
–
322.0
2,614.9
7,314.9
2,455.6
2,537.9
7,849.0
7,623.5
–
159.8
(3,250.1)
4,758.7
–
173.4
(3,019.9)
4,777.0
127
Goodman Group
Notes to the consolidated financial statements
Other items (continued)
27 Parent entity disclosures (continued)
The financial information for the parent entities of Goodman and
GIT has been prepared on the same basis as the consolidated
financial statements, except as set out below:
Investments in controlled entities and Partnerships
Investments in controlled entities and Partnerships are
accounted for at cost in the financial statements of Goodman
Limited and Goodman Industrial Trust. Distributions/dividends
received from Partnerships are recognised in the income
statement, rather than being deducted from the carrying
amount of these investments.
Tax consolidation
Goodman Limited is the head entity in a tax consolidated
group comprising all Australian wholly owned subsidiaries
(this excludes GIT). The head entity recognises all of the
current tax assets and liabilities of the tax consolidated
group (after elimination of intra-group transactions).
Financial guarantees
Where the parent entities have provided financial guarantees
in relation to loans and payables of controlled entities for
no compensation, the fair values of these guarantees are
accounted for as contributions and recognised as part of the
cost of the investment.
Parent entity capital commitments
At 30 June 2021, the parent entities had no capital
commitments (2020: $nil).
Parent entity contingencies
Capitalisation Deed Poll
The Company, GFML, as responsible entity of the Trust,
GLHK and certain of their wholly owned controlled entities are
‘investors’ under a Capitalisation Deed Poll (CDP) dated 23
May 2007. Under the CDP, each investor undertakes to pay to
the relevant controlled entity borrower (borrower) any amounts
owing under finance documents for the purpose of the CDP
when the borrower fails to make a payment. Any payments by
an investor to a borrower will be by way of loan to, or proceeds
for the subscription of equity in, the borrower by the investor.
United States and Reg S senior notes
Under the issue of notes in the United States 144A/Reg S
bond market (refer to notes 16(b) and 16(c)), controlled
entities of GIT had on issue USD and EUR notes amounting
to US$850.0 million and €500.0 million respectively. GL,
GFML, as responsible entity of the Trust, and GLHK have
unconditionally and irrevocably guaranteed on a joint and
several basis the payment of principal and interest in respect
of each of the notes.
28. Events subsequent to balance date
Goodman and GIT
Other than as disclosed elsewhere in the consolidated
financial report, there has not arisen in the interval between
the end of the financial year and the date of this consolidated
financial report any item, transaction or event of a material and
unusual nature likely, in the opinion of the Directors, to affect
significantly the operations of Goodman and GIT, the results of
those operations, or the state of affairs of Goodman and GIT,
in future financial years.
128
DIRECTORS' DECLARATION
In the opinion of the directors of Goodman Limited and the
directors of Goodman Funds Management Limited, the
responsible entity for Goodman Industrial Trust:
(a) the consolidated financial statements and the notes of
Goodman Limited and its controlled entities and Goodman
Industrial Trust and its controlled entities set out on pages
68 to 128 and the remuneration report that is contained on
pages 26 to 65 in the Directors’ report, are in accordance
with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of Goodman’s and GIT’s
financial position as at 30 June 2021 and of their
performance for the financial year ended on that date
complying with Australian Accounting Standards
(including Australian Accounting Interpretations) and
the Corporations Regulations 2001
(b) there are reasonable grounds to believe that the Company
and the Trust will be able to pay their debts as and when
they become due and payable.
The Directors have been given the declarations required by
section 295A of the Corporations Act 2001 from the Group
Chief Executive Officer and Chief Financial Officer for the
financial year ended 30 June 2021.
The Directors draw attention to note 1 to the consolidated
financial statements, which includes a statement of
compliance with International Financial Reporting Standards.
Signed in accordance with a resolution of the Directors.
Stephen Johns
Independent Chairman
Gregory Goodman
Group Chief Executive Officer
Sydney, 12 August 2021
Annual Report 2021
129
Goodman Group
Independent Auditor’s Report
To the stapled security holders of Goodman Group and the unitholders of
Goodman Industrial Trust
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
Opinion
Basis for opinions
We have audited the Financial Report of Goodman Limited
(the Company) as the deemed parent presenting the stapled
security arrangement of the Goodman Group (the Goodman
Group Financial Report).
We conducted our audits in accordance with Australian
Auditing Standards. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis
for our opinions.
We have also audited the Financial Statements of Goodman
Industrial Trust (the Trust Financial Report).
In our opinion, each of the accompanying Goodman Group
Financial Report and Trust Financial Report are in accordance
with the Corporations Act 2001, including:
+
giving a true and fair view of the Goodman Group’s and
of the Trust’s financial position as at 30 June 2021 and of
their financial performance for the year ended on that date;
and
+
complying with Australian Accounting Standards and the
Corporations Regulations 2001.
The content of each of the Goodman Group and Trust
Financial Report comprise:
Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of
the Financial Report section of our report.
We are independent of the Goodman Group, Goodman
Limited, Goodman Funds Management Limited (the
Responsible Entity of the Trust) and the Trust in accordance
with the Corporations Act 2001 and the ethical requirements
of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants
(including Independence Standards) (the Code) that are
relevant to our audits of the Financial Report in Australia.
We have fulfilled our other ethical responsibilities in
accordance with the Code.
+
+
Consolidated statement of financial position as at 30 June
2021;
Key Audit Matters
Consolidated income statement, Consolidated statement
of comprehensive income, Consolidated statement of
changes in equity and Consolidated cash flow statement
for the year then ended;
The Key Audit Matters we identified for the Goodman Group are:
+
+
Recognition of development income;
Valuation of investment properties, investments accounted
for using the equity method and inventories; and
+
Notes including a summary of significant accounting
policies; and
(collectively referred to as Financial Statements)
+
Directors’ Declaration.
The Goodman Group consists of Goodman Limited and the
entities it controlled at the year-end or from time to time during
the financial year, Goodman Industrial Trust (the Trust) and the
entities it controlled at the year-end or from time to time during
the financial year and Goodman Logistics (HK) Limited and the
entities it controlled at the year-end or from time to time during
the financial year.
+
Value of intangible assets.
Key Audit Matters are those matters that, in our professional
judgement, were of most significance in our audit of the
Financial Report of the current period.
These matters were addressed in the context of our audit of
the Financial Report as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
KPMG, an Australian partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private
English company limited by guarantee. All rights reserved, The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG
global organization, Liability limited by a scheme approved under Professional Standards Legislation.
130
Annual Report 2021
Recognition of development income ($1,492.0m)
Refer to Note 2 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Development income was a key audit matter due to:
+ its significant value (39% of revenue and other income);
+ the high volume of transactions; and
+ the judgements applied by us to assess the Goodman Group’s
determination of revenue recognised during the period in relation to
contracts which remain in progress at period end.
Development income comprises income from disposal of inventories,
other development income (including development management
services) and income from fixed price construction contracts.
Income from development management services is recognised
progressively, requiring judgement by us when considering the Goodman
Group’s determination of the amount and extent of the services provided
based on contract deliverables.
Income from certain inventory disposals and fixed price construction
contracts is recognised in proportion to the stage of completion of the
relevant contracts. We focused on the stage of completion estimation
which is based on costs incurred as a percentage of estimated total
costs for each contract.
Our procedures included:
+ Selecting specific contracts from development income recognised
(in relation to contracts that remain in progress at period end) based
on quantitative and qualitative information (such as the size and
complexity of the arrangement); and
+ Evaluating Goodman Group’s recognition of development income
against the criteria in the accounting standards.
For the specific contracts selected, our procedures included:
+ Understanding the underlying contractual arrangements, in particular
their unique terms;
+ Where recognition of development income is conditional upon certain
events occurring, checking correspondence with external parties for
evidence of achievement of conditions;
+ Assessing the Goodman Group’s determination of revenue
recognised during the period in accordance with the provision
of services stipulated in the underlying contract or the stage of
completion;
+ For revenue recognised based on the stage of completion, assessing
a sample of costs incurred to date and total forecast costs against
project feasibilities; and
+ Challenging the key assumptions included in the Goodman Group’s
project feasibilities by comparing to commentary published by
industry experts, recent market transactions, and our knowledge of
historical performance of the assets.
131
Goodman Group
Independent Auditor’s Report
Valuation of investment properties ($1,851.2m), investments accounted for using the
equity method ($10,660.0m) and inventories ($1,427.8m)
Refer to Note 6 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Goodman Group’s investments in property assets include investment
properties and inventories, which are held either directly or through its
investments accounted for using the equity method.
Investment properties are held at fair value and inventories are held at
the lower of cost and net realisable value. The valuation of property
assets are determined using internal methodologies or through the use of
external valuation experts.
The valuation of property assets is a key audit matter as they are
significant in value (being 83% of total assets) and contain assumptions
with estimation uncertainty.
This leads to additional audit effort due to differing assumptions based
on asset classes, geographies and characteristics of individual property
assets.
The valuation of property assets include a number of significant
assumptions:
+ Investment properties:
- capitalisation rates;
- discount rates;
- customer covenant strength;
- market rental income;
- weighted average lease expiry and vacancy levels;
- projections of capital expenditure; and
- lease incentive costs.
+ Inventories:
- forecast capitalisation rates and market rental income;
- land value per square metre;
- letting up periods and lease incentive costs; and
- development costs.
In assessing this Key Audit Matter, we involved real estate valuation
specialists, who understand the Group’s investment profile, business and
the economic environment it operates in.
Our procedures included:
+ Obtaining an understanding of the Goodman Group’s process
regarding the valuation of property assets;
+ Assessing the methodologies used in the valuations of property
assets, for consistency with accounting standards, industry practice
and the Goodman Group’s policies; and
+ Working with real estate valuation specialists to read published
reports and industry commentary to gain an understanding of
prevailing property market conditions.
For investment properties, taking into account asset classes,
geographies and characteristics of individual investment properties:
+ Assessing the scope, competence and objectivity of external
valuation experts and Goodman Group’s internal valuers;
+ Challenging significant assumptions, with reference to published
industry reports and commentary to gain an understanding of
prevailing property market conditions;
+ With assistance of real estate valuation specialists, assessing a
sample of significant assumptions including capitalisation rates,
discount rates, customer covenant strength, market rental income,
weighted average lease expiry and vacancy levels, projections
of capital expenditure and lease incentive costs. We did this by
comparing to market analysis published by industry experts, recent
market transactions, inquiries with the Goodman Group, historical
performance of the assets and using our industry experience; and
+ Assessing the disclosures in the financial report using our
understanding obtained from our testing, against accounting
standard requirements.
For inventories:
+ Challenging the key assumptions included in the Goodman
Group’s internal recoverability assessments (project feasibilities)
and valuations by comparing to commentary published by industry
experts, recent market transactions, and our knowledge of historical
performance of the assets.
132
Annual Report 2021
Value of intangible assets ($822.6m)
Refer to Note 14 to the Financial Report
The key audit matter
How the matter was addressed in our audit
At 30 June 2021 the Goodman Group’s intangible assets comprised
goodwill and management rights. The valuation of intangible assets
was identified as a key audit matter as the Goodman Group’s annual
impairment assessment contains significant judgments involving
forecasting and discounting future cash flows.
The impairment assessment is based on the value in use model
performed for each division of the Goodman Group. The value in use
models incorporate significant judgment in respect of future conditions
and we focussed on key assumptions such as:
+ forecast cash flows, growth rates and terminal growth rates, taking
into consideration the level and margins from ongoing development
activity and forecast funds management income (which is primarily
dependent on assets under management). The Group’s models are
sensitive to small changes in these assumptions, which may reduce
available headroom. This drives additional audit effort specific to their
feasibility and consistency of application to the Group’s strategy; and
+ discount rates – these are complicated in nature and vary according
to the conditions the division is subject to from time to time.
We involved valuation specialists in assessing this Key Audit Matter.
Our procedures included:
+ Considering the appropriateness of the value in use method applied
by the Goodman Group to perform the annual test of goodwill and
management rights impairment, against the requirements of the
accounting standards.
+ For divisions with significant intangible assets:
- Working with our valuation specialists, comparing the discount
rates and terminal growth rates used in the value in use models to
publicly available data of comparable entities;
- Assessing the ability of the Goodman Group to accurately forecast
by comparing previous forecasts to actual results;
- Comparing the division’s forecast cash flows contained in the value
in use models to Board approved forecasts;
- Challenging the divisions forecast cash flows from development
activity and funds management based on our understanding of
local market conditions; and
- Performing a sensitivity analysis on the discount rates, growth rates
and forecast assets under management by applying a reasonably
possible range of outcomes to focus our further procedures.
+ Assessing the disclosures in the financial report using our
understanding from our testing and against the requirements of the
accounting standards.
133
Goodman Group
Independent Auditor’s Report
Other Information
Other Information is financial and non-financial information
in Goodman Group’s annual reporting which is provided in
addition to the Financial Report and the Auditor’s Report. The
Directors of the Company and the Directors of the Responsible
Entity are responsible for the Other Information.
The Other Information we obtained prior to the date of
this Auditor’s Report was the Directors’ Report (including
the Remuneration Report). The Chairman’s Letter, Group
Chief Executive Officer’s Report, Corporate Responsibility
and Sustainability, Corporate Governance and Securities
Information are expected to be made available to us after the
date of the Auditor's Report.
Our opinion on the Financial Report does not cover the Other
Information and, accordingly, we do not express an audit
opinion or any form of assurance conclusion thereon, with
the exception of the Remuneration Report and our related
assurance opinion.
In connection with our audit of the Financial Report, our
responsibility is to read the Other Information. In doing so,
we consider whether the Other Information is materially
inconsistent with the Financial Report or our knowledge
obtained in the audit, or otherwise appears to be materially
misstated.
We are required to report if we conclude that there is a
material misstatement of this Other Information, and based
on the work we have performed on the Other Information that
we obtained prior to the date of this Auditor’s Report, we have
nothing to report.
Responsibilities of the Directors for the
Financial Report
The Directors of the Company and the Responsible Entity are
responsible for:
+
+
+
preparing the Financial Report that gives a true and fair
view in accordance with Australian Accounting Standards
and the Corporations Act 2001;
implementing necessary internal control to enable the
preparation of a Financial Report that gives a true and fair
view and is free from material misstatement, whether due
to fraud or error; and
assessing the Goodman Group and Trust’s ability to
continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This
includes disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting
unless they either intend to liquidate the Goodman Group
or the Trust or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the
Financial Report
Our objective is:
+
to obtain reasonable assurance about whether the
Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
+
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with
Australian Auditing Standards will always detect a material
misstatement when it exists.
Misstatements can arise from fraud or error. They are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of the Financial Report.
A further description of our responsibilities for the audit of
the Financial Report is located at the Auditing and Assurance
Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf.
This description forms part of our Auditor’s Report.
134
REPORT ON THE REMUNERATION REPORT
Opinion
In our opinion, the Remuneration Report of Goodman Limited
for the year ended 30 June 2021, complies with Section 300A
of the Corporations Act 2001.
Directors’ responsibilities
The Directors of Goodman Limited are responsible for the
preparation and presentation of the Remuneration Report in
accordance with Section 300A of the Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included on
pages 26 to 65 of the Directors’ report for the year ended
30 June 2021.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
Eileen Hoggett
Partner
Sydney
12 August 2021
Annual Report 2021
135
Goodman Group
Appendix A – Goodman Logistics (HK) Limited
and its subsidiaries
Consolidated financial statements for the year ended 30 June 2021
CONTENTS
Report of the Directors
Independent auditor’s report
Consolidated statement of financial position
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Consolidated cash flow statement
Notes to the consolidated financial statements
Basis of preparation
Basis of preparation
1
Results for the year
2
Profit before interest and income tax
3
4
5
Segment reporting
Income tax expense
Profit attributable to equity
shareholders of the Company
Operating assets and liabilities
6
Property assets
7
Receivables
8 Contract balances
9
Assets held for sale
10 Payables
11 Leases
Capital management
12 Finance income and expense
13 Other financial assets and liabilities
14 Financial risk management
15 Dividends
16 Share capital
Other items
17 Notes to the consolidated cash flow statement
18 Reserves
19 Retained earnings
20
Investments in subsidiaries
21 Related party transactions
22 Commitments
23 Contingencies
24 Company level statement of financial position
25 Subsequent events
137
146
148
149
150
151
152
154
156
159
160
161
167
169
170
170
170
171
172
172
177
178
180
182
183
183
184
186
186
187
187
136
Annual Report 2021
Directors of subsidiaries
The names of Directors who have served on the Boards of the
subsidiaries of the Company during FY21 are set out below:
Ai Ning Tan
Bart Manteleers
Béla Kakuk
Charles Crossland
Chi Wing Lin
Chun Kit Fung
David Anthony Hinchey
Dominique Prince
Edwin Chong Chee Wai
Francisco Palacio
Garcia Cuenca Ignacio
Gareth Owen
Godfrey Abel
Goh Hoi Lai
Hans Ongena
Henry Kelly
Hugh Baggie
Izak ten Hove
James Cornell
Jan Palek
Jason Harris
Jie Yang
John Conway
John Morton Dakin
Jorn Bruyninckx
Joseph Salvaggio
Karl Dockx
Kelly Moore
Kim Swee Seah
Kristoffer Allan Harvey
Lien Standaert
Luke Caffey
Nick Taunt
Mak Chun Kit Jacky
Marwan Bustani
Matthew Macdonald
Michael O'Sullivan
Michael Woodford
Nicholas Kurtis
Nigel Allsop
Paul Adams
Paul Heslop
Peter Ralston
Philippe Arfi
Philippe Van der Beken
Philip Turpin
Robert Nicholson
Robert Reed
Shiling Li
Stephen Young
Tai Yit Chan
Tan Ai Ning
Tang Chenying
Tim Cruypelans
Timothy Downes
Wai Ho Stephen Lee
Wang Chen
Xiaoyin Zhang
Report of the Directors
The Directors have pleasure in submitting their annual
financial report together with the audited financial statements
of Goodman Logistics (HK) Limited (Company) and its
subsidiaries (collectively referred to as the Consolidated Entity)
for the year ended 30 June 2021 (FY21).
Incorporation and principal place of business
Goodman Logistics (HK) Limited was incorporated in Hong Kong
on 18 January 2012 and has its principal place of business at
Suite 901, Three Pacific Place, 1 Queen’s Road East, Hong Kong.
On 22 August 2012, the Company became a party to the
stapling deed with Goodman Limited (GL) and Goodman
Industrial Trust (GIT), and together the three entities and their
subsidiaries are known as Goodman Group. Goodman Group
is listed on the Australian Securities Exchange (ASX).
Principal activities
The principal activities of the Consolidated Entity are
investment in directly and indirectly held industrial property,
investment management, property management services and
development management. The principal activities and other
particulars of the subsidiaries are set out in note 20 to the
consolidated financial statements.
Financial statements
The financial performance of the Consolidated Entity for
the year ended 30 June 2021 and the Consolidated Entity’s
financial position at that date are set out in the consolidated
financial report on pages 148 to 187.
During the financial year, the Company declared a final
dividend of 6.0 cents per share amounting to $110.8 million.
The dividend is payable out of FY21 profit after tax. In the prior
year, the Company declared a final dividend of 4.0 cents per
share amounting to $73.1 million out of FY20 profit after tax.
Share capital
Details of the movements in share capital of the Company
during FY21 are set out in note 16 to the consolidated
financial statements.
Directors
The Directors during the year and up to the date of this
report were:
+
+
+
+
+
Stephen Paul Johns (appointed 19 November 2020)
David Jeremy Collins
Gregory Leith Goodman1
(alternate Director to Stephen Paul Johns)
Daniel Cornelius D. Peeters
Ian Douglas Ferrier, AM (retired 19 November 2020).
1. Alternate Director to Ian Douglas Ferrier until 19 November 2020.
137
Goodman Group
Report of the Directors
(continued)
BUSINESS REVIEW
State of affairs
There were no significant changes in the Consolidated Entity’s
state of affairs during the year.
Goodman Group’s strategy
DEVELOP
Develop properties in key locations to
meet our customers’ business needs
N
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Manage and invest in high-quality
real estate globally for our investment partners
MANAGE
Goodman Group’s purpose is to make space for its
stakeholders’ ambitions. This purpose is executed through
Goodman Group’s integrated business capabilities model
– “own+develop+manage”, where its customers’ need for
sustainable solutions and service excellence in high quality
locations, is at the centre.
The business capabilities are supported by:
1. Quality partnerships – develop and maintain strong
relationships with key stakeholders including customers,
investment partners, suppliers and employees.
2. Quality product and service – deliver high quality product
and customer service in key logistics markets globally by
actively leveraging Goodman Group’s industrial sector
expertise, development and management experience and
global operating platform.
3. Culture and brand – promote Goodman Group’s unique
brand and embed Goodman Group’s core values across
each operating division to foster a strong and consistent
culture. The core values are:
+ Innovation – New ideas push our business forward.
We focus on the future, proactively looking for
new opportunities and improved solutions for our
stakeholders that will make the world a better place
for all of us.
+ Determination – Determination gets things done. We
are motivated by excellence and work hard to achieve
it, actively pursuing the very best outcomes for our
stakeholders.
+ Integrity – We have integrity, always. We work
inclusively and transparently, balancing the needs of
our business and our people, with the needs of the
community and those we do business with.
+ Sustainability – We’re building our business for the
long term. That’s why we consider the planet and all
the people on it in everything we do. Our initiatives
demonstrate our ongoing commitment to having a
positive economic, environmental and social impact
on the world.
4. Operational efficiency – optimise business resources to
maximise effectiveness and drive efficiencies.
5. Capital efficiency – maintain active capital management to
facilitate appropriate returns and sustainability of the business.
138
Performance review
The Consolidated Entity has operations in Asia, Continental
Europe and the United Kingdom, and its earnings are derived from
property investment, development and management activities.
The Consolidated Entity has been able to adapt to the
challenges that FY21 has brought and has continued to grow
the business sustainably for the long term.
The global pandemic has accelerated the changes in
consumption trends that had already begun across the
physical and digital spaces and this has increased demand
for warehouse and logistics facilities. This has benefitted the
Group’s existing portfolios in FY21, which have reported growth
in rental income and maintained high occupancy levels. It has
also given the Group confidence to commence a number of
new developments, particularly multi-storey and higher intensity
buildings within its urban locations, and these developments are
providing essential real estate infrastructure for the long-term
requirements of those cities and the Group’s customers.
This increase in development activity has been a key driver
of the Consolidated Entity’s operating performance for FY21,
with operating profit increasing by 28.1% to $499.8 million,
compared to $390.3 million for the prior year.
In assessing Goodman Group’s underlying performance, the
Directors consider operating earnings as well as Goodman
Group’s statutory profit. Operating earnings is a proxy for ‘cash
earnings’ and is not an income measure under Hong Kong
Financial Reporting Standards. It is defined as profit attributable
to Shareholders adjusted for property valuations, impairment
losses and other non-cash adjustments or non-recurring items.
Analysis of operating profit
Property investment earnings
Development earnings
Management earnings
Operating expenses
Net finance expense (operating)1
Income tax expense (operating)
Operating profit
2021
$M
2020
$M
46.1
54.2
528.0
356.6
146.3
219.1
720.4
629.9
(199.6)
(186.1)
520.8
443.8
(8.8)
(12.2)
(13.3)
(40.2)
499.8
390.3
1.
Net finance expense (operating) excludes derivative mark to market and
unrealised foreign exchange movements.
Annual Report 2021
Property investment activities
Property investment earnings in FY21 of $46.1 million were
lower than the prior year and comprised 6% of the total
earnings (2020: 8%).
Net property income
Partnerships
Property investment earnings
Key metrics
Weighted average capitalisation rate (%)
Weighted average lease expiry (years)
Occupancy (%)
2021
$M
13.4
32.7
46.1
2020
$M
16.6
37.6
54.2
2021
2020
4.9
3.8
5.2
4.0
98.0
96.7
Property investment earnings comprise gross property
income (excluding straight lining of rental income), less
property expenses, plus the Consolidated Entity’s share of
the results of property investment joint ventures (referred to
by the Consolidated Entity as Partnerships). The key drivers
for maintaining or growing the Consolidated Entity’s property
investment earnings are increasing the level of assets under
management (AUM) (subject also to the Consolidated
Entity’s direct and indirect interest), maintaining or increasing
occupancy and rental levels within the portfolio, and
controlling operating and financing costs within Partnerships.
The Consolidated Entity’s property portfolios are concentrated
in large, urban centres where demand from customers has
put pressure on land use and availability. As a consequence
of the acceleration of consumer purchasing habits to online
shopping, the Consolidated Entity has seen increased demand
for space from customers in the food, consumer goods and
logistics sectors, particularly related to e-commerce operators
and those transitioning to online. At the same time, customers
have continued to invest in order to improve the efficiency of
their supply chains. In addition to storage and movements of
goods, data centres have also emerged as a rapidly growing
user of industrial property.
The Consolidated Entity’s share of investment earnings from
its cornerstone holdings in the Partnerships decreased by
13% to $32.7 million compared to the prior year. The lower
earnings in Continental Europe as a result of disposals in FY20
was partly offset by the stabilisation of developments in Asia
and the United Kingdom in FY20 and FY21.
During FY21, the Consolidated Entity’s share of property
valuations from the stabilised portfolios was $90.2 million.
Valuation gains occurred in all regions and whilst the rental
income growth and development completions were contributors
to these uplifts, the primary driver was capitalisation rate
compression. At 30 June 2021, the weighted average
capitalisation rate for the Consolidated Entity’s portfolios was
4.9%, compared to 5.2% at the start of FY21.
139
Goodman Group
Report of the Directors
Business review (continued)
Development activities
Management activities
In FY21, development earnings were $528.0 million, an
increase of 48% on the prior year, and comprised 73% of total
operating earnings (2020: 57%).
Development activity continued to be strong with work in
progress of $5.8 billion across 37 projects at 30 June 2021.
The increase in the Consolidated Entity’s development
earnings was primarily volume driven.
Management earnings in FY21 of $146.3 million decreased
by 33% compared to the prior year and comprised 20% of
total operating earnings (2020: 35%). This was due to lower
performance fee revenue recognised in FY21 and the net
adverse impact of the translation of the overseas earnings
compared to the prior year. The reduction in performance
related revenue was the result of the timing of calculation and
recognition of fees.
Management earnings
Key metrics:
Number of Partnerships
External AUM ($B)
2021
$M
146.3
2020
$M
219.1
2021
2020
7
7
23.0
21.5
Management earnings relate to the revenue from managing
both the property portfolios and the capital invested in
the Partnerships (management income). This includes
performance related revenues but excludes earnings from
managing development activities in the Partnerships, which
are included in development earnings. The key drivers for
maintaining or growing management earnings are activity
levels, asset performance, and increasing the level of AUM,
which can be impacted by property valuations and asset
disposals and is also dependent on liquidity including the
continued availability of third party capital to fund both
development activity and acquisitions across the Consolidated
Entity’s Partnerships.
Other items
Operating expenses increased mainly due to remuneration
costs as a result of modest inflation pressure and cash
incentives paid as a result of the Consolidated Entity’s overall
performance. Borrowing costs have fallen as a result of lower
interest rates on the Consolidated Entity’s loans. The reduction
in tax expense is primarily a function of changes to the
origin and nature of revenue arising from management and
development activities.
Net development income
Partnerships
Development earnings
Key metrics:
Work in progress ($B)
Work in progress (million square metres)
Work in progress (number of developments)
Developments completed during the year
(number of developments)
2021
$M
487.7
40.3
2020
$M
307.0
49.6
528.0
356.6
2021
2020
5.8
2.0
37
18
3.1
1.2
21
28
Development earnings consist of development income, plus
the Consolidated Entity’s share of the operating results of
Partnerships that is allocable to development activities, plus
net gains or losses from disposals of investment properties
and equity investments that are allocable to development
activities, plus interest income on loans to development
joint ventures, less development expenses. Development
income includes development management fees and also
performance related revenues associated with managing
individual development projects in Partnerships. The key
drivers for the Consolidated Entity’s development earnings are
the level of development activity, land and construction prices,
property valuations and the continued availability of third-party
capital to fund development activity.
Most of the inventory disposals and fixed price contract
income arose in Continental Europe, as Goodman Group’s
Partnerships in Continental Europe generally acquire
completed developments from the Consolidated Entity. In the
Consolidated Entity’s other operating segments, development
earnings are a mix of development management income,
including performance related income, and transactional
activity, including the Consolidated Entity’s share of
development profits reported by the Partnerships themselves.
Consistent with the prior year, most of the development
activity in FY21 was undertaken by or for the Partnerships and
third parties.
140
Statement of financial position
Cash flow
Stabilised investment properties
Cornerstone investments in Partnerships
Development holdings
Cash
Other assets
Total assets
Loans from related parties
Other liabilities
Total liabilities
Non-controlling interests
2021
$M
2020
$M
163.9
1,470.0
1,140.9
358.4
1,233.0
7.2
1,276.2
1,056.2
357.4
942.0
4,366.2 3,639.0
1,891.1
1,731.0
705.2
493.3
2,596.3
2,224.3
22.2
20.0
Net assets attributable to Shareholders
1,747.7 1,394.7
The stabilised investment properties relate to new acquisitions
in Asia and the United Kingdom.
The carrying value of cornerstone investments in Partnerships
has increased by $193.8 million to $1,470.0 million, principally
due to the net investment in the Partnerships and the valuation
uplifts. A reconciliation of the current year movement in
cornerstone investments in Partnerships is detailed in note 6(f)
to the consolidated financial statements.
The increase in development holdings by $84.7 million to
$1,140.9 million is primarily due to additional expenditure on
development projects in Continental Europe, China and the
United Kingdom during the year.
Other assets included receivables, fair values of derivative
financial instruments that are in an asset position, contract
assets, property, plant and equipment and tax assets (including
deferred tax). Other liabilities included trade and other payables,
the provision for dividends to Shareholders, fair values of
derivative financial instruments that are in a liability position,
employee benefits and tax liabilities (including deferred tax).
Annual Report 2021
2021
$M
473.6
(271.2)
(200.5)
2020
$M
376.3
(5.4)
(213.4)
1.9
157.5
Operating cash flows
Investing cash flows
Financing cash flows
Net increase in cash held
Effect of exchange rate fluctuations on cash held
(11.7)
(2.0)
Cash at the beginning of the year
Cash at the end of the year
368.2
212.7
358.4
368.2
The increase in the net operating cash flows compared to the
prior year primarily relates to development activities. During
the year, the Consolidated Entity disposed of developments
in Continental Europe and the United Kingdom, however, this
was partly offset by an increase in development cash outflows,
with market conditions remaining strong in all regions.
The net investing cash outflow was due to the net investment
in the Consolidated Entity’s Partnerships, to fund acquisitions
and new developments, plus the acquisitions of investment
properties in Asia and the United Kingdom.
Financing cash flows principally relate to the net repayment
of loans to related parties and payment of the dividend in
August 2020.
Outlook
The Consolidated Entity has been able to adapt to the
changes in the world to enable it to execute its strategy well
and be in a strong position to continue to do so.
The Consolidated Entity’s urban infill markets are experiencing
significant demand as customers respond to consumer
needs. The evolving consumption trends across the physical
and digital space are fundamentally impacting the volume
and changing the nature of demand from customers. As a
consequence, development activity is expected to be a key
contributor to the Group’s performance, with the customer
demand maintaining the high occupancy levels and the rental
income growth across the Consolidated Entity’s portfolios.
Further information as to other likely developments in the
operations of the Consolidated Entity and the expected results
of those operations in future financial years has not been
included in this report of the Directors because disclosure
of the information would be likely to result in unreasonable
prejudice to the Consolidated Entity.
141
Goodman Group
Report of the Directors
Risks
Goodman Group identifies strategic and operational risks for each of its regions as part of its strategy process. The key risks, an
assessment of their likelihood of occurrence and consequences and controls that are in place to mitigate the risks are reported
to the Goodman Group Board annually.
Goodman Group has established formal systems and processes to manage the risks at each stage of its decision-making
process. This is facilitated by a Goodman Group Investment Committee comprising senior executives, chaired by the Group
Chief Executive Officer, which considers all major operational decisions and transactions. The Goodman Group Investment
Committee meets on a weekly basis.
The Goodman Group Board has separate Board committees to review and assess key risks. The Risk and Compliance
Committee reviews and monitors a range of material risks in Goodman Group’s risk management systems including, among
other risks, market, operational, sustainability, regulation and compliance and information technology. The Goodman Group
Audit Committee reviews and monitors financial risk management and tax policies.
The key risks faced by Goodman Group and the controls that have been established to manage those risks are set out below:
Risk area
Mitigation
+ Low gearing, ample liquidity and appropriate hedging and duration
to absorb market shocks
+ Appropriate hedging quantities and duration in accordance with
Goodman Group's financial risk management policy
+ Diversification and tenure of debt funding sources and maturities
+ Capital partnering transfers risks into Partnerships
+ Diversification of investment partners
+ Change in distribution pay-out ratio consistent with contribution
to increasing development workbook
+ Strong assets that can generate better rental outcomes
+ Long lease terms with prime customers
+ Key urban market strategy – urban, infill locations support re-usability
of property
+ Adaptable and re-usable building design – ease to reconfigure for
another customer.
+ Global diversification of Goodman Group's property portfolios
+ Focus on core property portfolios in key urban market locations
+ Focus on cost management
+ Prudent capital management with low gearing and significant
available liquidity to allow for potential market shocks
+ Co-investment with local capital partners.
+ Independent governance structures
+ Core values and attitudes, with an embedded compliance culture
focused on best practice
+ Dedicated Chief Risk Officer and Compliance Officer
+ Review of transactions by the Goodman Group Investment Committee.
+ Succession planning for senior executives
+ Competitive remuneration structures, including the
Goodman Group Long Term Incentive Plan (LTIP)
+ Performance management and review
+ Goodman Group values program
+ Learning, development and engagement programs.
Capital
management
(debt, equity
and cash flow)
Goodman Group could suffer an inability to
deliver its strategy, or an acute liquidity or
solvency crisis, financial loss or financial distress
as a result of a failure in the design or execution
of its capital management and financing strategy.
Economic and
geopolitical
environment
Governance,
regulation and
compliance
People and culture
Global economic conditions and government
policies present both risks and opportunities
in the property and financial markets and the
business of our customers, which can impact the
delivery of Goodman Group's strategy and
its financial performance.
A continued increase in geopolitical tension
between countries could have potential
consequences on our people, operations and
capital partners.
Non-compliance with legislation, regulators, or
internal policies, or to understand and respond
to changes in the political and regulatory
environment (including taxation) could result in
legal action, financial consequences and damage
our standing and reputation with stakeholders.
Failure to recruit, develop, support, and retain
staff with the right skills and experience may
result in significant underperformance or impact
the effectiveness of operations and decision
making, in turn impacting business performance.
Maintaining an organisational culture, in a
changing workplace environment, commensurate
with Goodman Group’s values.
142
Annual Report 2021
Risk area
Mitigation
Development
Development risks may arise from location,
site complexity, planning and permitting,
infrastructure, size, duration along with general
contractor capability.
Disruption, changes
in demand and
obsolescence
The longer-term risk that an inability to
understand and respond effectively to changes
in our competitive landscape and customer
value chain could result in business model
disruption and asset obsolescence, including the
perception of obsolescence in the short term.
Environmental
sustainability and
climate change
Failure to deliver on Goodman Group's
sustainability leadership strategy and ambitions
may lead to a negative impact on Goodman
Group's reputation, ability to raise capital and
a disruption to operations and stranded assets.
Asset and portfolio
Inability to execute asset planning and
management strategies, including leasing
risk exposures, can reduce returns from
Goodman Group's portfolios.
Concentration
of counterparties
and markets
Over-exposure to specific areas, such as capital
partners, supply chain, customers and markets,
may limit growth and sustainability opportunities.
Information and
data security
Maintaining security (including cyber security)
of IT environment and data, ensuring continuity
of IT infrastructure and applications to support
sustainability and growth and prevent operational,
regulatory, financial and reputational impacts.
Infectious
disease pandemic
There continues to be significant uncertainty
associated with the COVID-19 pandemic, with
mutations of the virus and significant outbreaks
continuing to occur globally. While vaccine
distribution is underway, there are challenges
with production and supply. Also the success of
the vaccine in enabling the world to stabilise and
transition to a normal footing is still to be understood.
+ Review of development projects by the Goodman Group
Investment Committee
+ Goodman Group defined design specifications, which cover
environmental, technological, and safety requirements, protecting
against short-term obsolescence
+ Redevelopment of older assets to intensify use
+ Pre-selecting and engaging general contractors that are
appropriately capitalised
+ Internal audit reviews
+ Insurance program, both Goodman Group and general contractor,
including project specific insurance
+ Ongoing monitoring and reporting of WIP and levels of speculative
development, with Goodman Group Board oversight including limits
with respect to speculative development and higher development
risk provisions.
+ Key urban market strategy – urban, infill locations support re-usability
of property
+ Adaptable and re-usable building design – ease to reconfigure for
another customer
+ Geographic diversification
+ Capital partnering transfers risks into Partnerships
+ Insurance program (both Goodman Group's and key contractors),
including project specific insurance covering design and defects
+ Long lease terms with prime customers.
+ Corporate Responsibility and Sustainability policy
+ 2030 Sustainability Strategy including the assessment of
individual assets to improve resilience and implementation
of sustainability initiatives
+ Sustainability guidelines for development projects
+ Review and approval of acquisitions and development projects by
the Goodman Group Investment Committee and relevant Partnership
Investment Committee, including consideration of climate in due
diligence and specification.
+ Key urban market strategy – urban, infill locations where customer
demand is strongest
+ Diversification of customer base and lease expiries
+ Review of significant leasing transactions and development projects
by the Goodman Group Investment Committee
+ Capital expenditure programs keeping pace with property lifecycle.
+ Diversification of customer base and lease expiries
+ Diversification of capital partners and Partnership expiries
+ Contractor pre-selection and tendering
+ Independence governance structure.
+ Reporting of risks and management activity
+ Proactive monitoring, review and testing of infrastructure
+ Disaster recovery and business continuity planning and testing
+ Benchmarked strategy for delivery of security IT infrastructure and systems
+ Training and awareness program and other assurance activities
for monitoring and improvement.
+ Protect and support our people
+ Global diversification of Goodman Group's property portfolios
+ Diversification of customer base
+ In-house property management team enabling flexibility to support
and respond to customers
+ Capital model, strong balance sheet with adequate liquidity available.
143
Goodman Group
Report of the Directors
Environmental regulations
The Consolidated Entity has policies and procedures to identify and appropriately address environmental obligations that might
arise in respect of the Consolidated Entity’s operations that are subject to significant environmental regulation under the laws of
the countries the Consolidated Entity operates in. The Directors have determined that the Consolidated Entity has complied with
those obligations during the financial year and that there has not been any material breach.
Disclosure in respect of any indemnification of Directors
A permitted indemnity provision (as defined in section 469 of the Hong Kong Companies Ordinance) for the benefit of the
Directors of the Company is currently in force and was in force throughout this year.
Directors’ interests in contracts
No contract of significance in relation to the Consolidated Entity’s business to which the Company, its subsidiaries or any of its fellow
subsidiaries was a party and in which the Directors of the Company had a material interest, whether directly or indirectly, subsisted at
the end of the year or at any time during the year.
Directors’ interests in shares
At the end of the year, the Directors (including alternate Directors) held the following interests in the stapled securities of
Goodman Group, which are listed on the ASX:
Directors
Stephen Paul Johns
David Jeremy Collins
Gregory Leith Goodman
Daniel Cornelius D. Peeters
Direct
securities
–
5,000
458,207
–
Indirect
securities
41,143
–
38,029,673
1,633,131
Total
41,143
5,000
38,487,880
1,633,131
In addition, Gregory Goodman and Daniel Peeters participate in the LTIP under which they hold performance rights. Performance
rights entitle participants to receive Goodman Group stapled securities without the payment of consideration, subject to Goodman
Group satisfying performance criteria and the participants remaining employees of Goodman Group.
Details of the awards of performance rights under the LTIP granted as compensation to the Directors (including alternate Directors)
at 30 June 2021 are as follows:
Number of
performance
rights at the start
of the year
Number of
performance
rights granted
during the year
Number of
performance
rights vested
during the year
Number of
performance
rights forfeited
during the year
Number of
performance
rights at the
end of the year
Date
performance
rights granted
Financial
years in which
grant vests
Gregory Leith
Goodman
Daniel Cornelius
D. Peeters
–
950,000
900,000
1,600,000
1,600,000
1,600,000
650,000
–
–
–
–
–
–
380,000
350,000
550,000
550,000
400,000
146,250
–
–
–
–
–
–
–
–
(533,333)
(800,000)
(650,000)
–
–
(183,333)
(200,000)
(146,250)
–
–
–
–
–
–
–
–
–
–
–
–
950,000
19 Nov 20
2024 – 2026
900,000
20 Nov 19
2023 – 2025
1,600,000
15 Nov 18
2022 – 2024
1,066,667
16 Nov 17
2021 – 2023
800,000
30 Sep 16
2020 – 2022
–
25 Nov 15
2019 – 2021
380,000
19 Nov 20
2024 – 2026
350,000
20 Nov 19
2023 – 2025
550,000
15 Nov 18
2022 – 2024
366,667
200,000
16 Nov 17
2021 – 2023
30 Sep 16
2020 – 2022
–
25 Nov 15
2019 – 2021
Apart from the above, at no time during the year was the Company, its subsidiaries or any of its fellow subsidiaries a party to any
arrangement to enable the Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures
of the Company or any other related body corporate.
144
Auditors
KPMG retire and, being eligible, offer themselves for re-
appointment. A resolution for the re-appointment of KPMG as
auditors of the Company is to be proposed at the forthcoming
Annual General Meeting.
Subsequent events
There has not arisen in the interval between the end of the
financial year and the date of this report any item, transaction
or event of a material and unusual nature likely, in the opinion
of the Directors, to affect significantly the operations of the
Consolidated Entity, the results of those operations, or the state
of affairs of the Consolidated Entity, in future financial years.
Declaration by the Group Chief Executive Officer
and Chief Financial Officer
The Directors have been given declarations equivalent to those
required of listed Australian companies by section 295A of the
Corporations Act 2001 from the Group Chief Executive Officer
and Chief Financial Officer for the year ended 30 June 2021.
By order of the Board of Directors
Stephen Paul Johns
Independent Chairman
David Jeremy Collins
Director
Sydney, 12 August 2021
Annual Report 2021
145
Goodman Group
Independent auditor’s report
To the members of Goodman Logistics (HK) Limited (Incorporated in Hong Kong with limited liability)
If, based on the work we have performed, we conclude that
there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report
in this regard.
Responsibilities of the Directors
for the consolidated financial statements
The Directors are responsible for the preparation of the
consolidated financial statements that give a true and fair
view in accordance with HKFRSs issued by the HKICPA and
the Hong Kong Companies Ordinance and for such internal
control as the Directors determine is necessary to enable the
preparation of consolidated financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the
Directors are responsible for assessing the Group’s ability
to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to
liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit
of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether
the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. This report
is made solely to you, as a body, in accordance with section
405 of the Hong Kong Companies Ordinance, and for no other
purpose. We do not assume responsibility towards or accept
liability to any other person for the contents of this report.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with
HKSAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated
financial statements.
Opinion
We have audited the consolidated financial statements of
Goodman Logistics (HK) Limited (the Company) and its
subsidiaries (the Group) set out on pages 148 to 187, which
comprise the consolidated statement of financial position as at
30 June 2021, the consolidated statement of comprehensive
income, the consolidated statement of changes in equity and
the consolidated cash flow statement for the year then ended
and notes to the consolidated financial statements, including
a summary of significant accounting policies.
In our opinion, the consolidated financial statements give a true
and fair view of the consolidated financial position of the Group
as at 30 June 2021 and of its consolidated financial performance
and its consolidated cash flows for the year then ended in
accordance with Hong Kong Financial Reporting Standards
(HKFRSs) issued by the Hong Kong Institute of Certified Public
Accountants (HKICPA) and have been properly prepared in
compliance with the Hong Kong Companies Ordinance.
Basis for opinion
We conducted our audit in accordance with Hong Kong
Standards on Auditing (HKSAs) issued by the HKICPA. Our
responsibilities under those standards are further described in
the Auditor’s responsibilities for the audit of the consolidated
financial statements section of our report. We are independent
of the Group in accordance with the HKICPA’s Code of Ethics
for Professional Accountants (the Code) and we have fulfilled
our other ethical responsibilities in accordance with the
Code. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Information other than the consolidated financial
statements and auditor’s report thereon
The Directors are responsible for the other information which
comprises all the information included in the Company’s
Report of the Directors.
Our opinion on the consolidated financial statements does
not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial
statements, our responsibility is to read the other information
and, in doing so, consider whether the other information
is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
146
Annual Report 2021
We communicate with the Directors regarding, among other
matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
KPMG
Certified Public Accountants
8th Floor, Prince’s Building
10 Chater Road
Central, Hong Kong
12 August 2021
As part of an audit in accordance with HKSAs, we exercise
professional judgement and maintain professional scepticism
throughout the audit. We also:
+
+
+
+
+
+
Identify and assess the risks of material misstatement of the
consolidated financial statements, whether due to fraud or
error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and
related disclosures made by the Directors.
Conclude on the appropriateness of the Directors’ use of
the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s
report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the
Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content
of the consolidated financial statements, including the
disclosures, and whether the consolidated financial
statements represent the underlying transactions and
events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction,
supervision and performance of the Group audit.
We remain solely responsible for our audit opinion.
147
Goodman Group
Consolidated statement of financial position
as at 30 June 2021
(expressed in Australian dollars)
Current assets
Cash and cash equivalents
Inventories
Receivables
Contract assets
Current tax receivables
Other assets
Assets held for sale
Total current assets
Non-current assets
Inventories
Investment properties
Investments accounted for using the equity method
Receivables
Other financial assets
Deferred tax assets
Property, plant and equipment
Other assets
Total non-current assets
Total assets
Current liabilities
Payables
Loans from related parties
Current tax payables
Employee benefits
Dividend payable
Total current liabilities
Non-current liabilities
Payables
Loans from related parties
Deferred tax liabilities
Employee benefits
Other financial liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity attributable to Shareholders
Share capital
Reserves
Retained earnings
Total equity attributable to Shareholders
Non-controlling interests
Total equity
Note
17(a)
6(b)
7
8
4(c)
9
6(b)
6(b)
6(b)
7
13
4(d)
10
21(c)
4(c)
15
10
21(c)
4(d)
13
16(a)
18
19
2021
$M
358.4
106.4
744.3
55.7
4.2
12.9
–
2020
$M
357.4
405.1
563.6
25.1
0.8
1.7
97.9
1,281.9
1,451.6
1,034.5
163.9
1,470.0
276.2
102.6
15.2
17.1
4.8
3,084.3
4,366.2
263.0
806.7
48.9
45.1
110.8
553.2
7.2
1,276.2
279.0
36.4
6.3
23.8
5.3
2,187.4
3,639.0
200.5
1,403.7
48.2
39.4
73.1
1,274.5
1,764.9
124.7
1,084.4
1.6
22.0
89.1
1,321.8
2,596.3
1,769.9
791.9
(629.0)
1,584.8
1,747.7
22.2
1,769.9
57.5
327.3
0.9
24.8
48.9
459.4
2,224.3
1,414.7
732.0
(624.5)
1,287.2
1,394.7
20.0
1,414.7
The notes on pages 152 to 187 form part of these consolidated financial statements. Approved and authorised for issue by the
Board of Directors on 12 August 2021.
Stephen Paul Johns
Director
148
David Jeremy Collins
Director
Consolidated statement of comprehensive income
for the year ended 30 June 2021
Annual Report 2021
(expressed in Australian dollars)
Revenue
Gross property income
Management income
Development income
Dividends from investments
Property and development expenses
Property expenses
Development expenses
Other income
Net loss from fair value adjustments on investment properties
Net (loss)/gain on disposal of investment properties
Share of net results of equity accounted investments
Net gain on disposal of equity accounted investments
Other expenses
Employee expenses
Share based payments expense
Administrative and other expenses
Transaction management fees
Profit before interest and income tax
Net finance income/(expense)
Finance income
Finance expense
Net finance expense
Profit before income tax
Income tax expense
Profit for the year
Profit for the year attributable to:
Shareholders
Non-controlling interests
Profit for the year
Other comprehensive income
Item that will not be reclassified to profit or loss:
Increase due to revaluation of other financial assets
Actuarial losses on defined benefit retirement schemes (net of tax)
Item that may be reclassified subsequently to profit or loss:
Effect of foreign currency translation
Other comprehensive (loss)/income for the year, net of tax
Total comprehensive income for the year
Total comprehensive income for the year attributable to:
Shareholders
Non-controlling interests
Total comprehensive income for the year
The notes on pages 152 to 187 form part of these consolidated financial statements.
Note
2
2
2
6(f)
2
2
12
12
4
19
2021
$M
15.6
188.7
1,171.7
0.8
1,376.8
(2.2)
(684.7)
(686.9)
–
(1.9)
164.7
1.8
164.6
(166.6)
(124.0)
(33.0)
(42.4)
(366.0)
488.5
21.8
(82.9)
(61.1)
427.4
(12.2)
415.2
408.4
6.8
415.2
7.6
(6.0)
1.6
(21.5)
(21.5)
(19.9)
395.3
389.0
6.3
395.3
2020
$M
21.5
276.5
653.6
–
951.6
(4.9)
(371.5)
(376.4)
(1.2)
0.2
107.0
24.9
130.9
(146.8)
(57.6)
(39.3)
(57.4)
(301.1)
405.0
23.7
(58.8)
(35.1)
369.9
(40.2)
329.7
325.5
4.2
329.7
5.5
–
5.5
(14.6)
(14.6)
(9.1)
320.6
316.2
4.4
320.6
149
Goodman Group
Consolidated statement of changes in equity
for the year ended 30 June 2021
Year ended 30 June 2020
(expressed in Australian dollars)
Balance at 1 July 2019
Total comprehensive income for the year
Profit for the year
Other comprehensive (loss)/income for the year
Total comprehensive (loss)/income
for the year, net of income tax
Contributions by and distributions to owners
Dividend declared/paid
Issue of shares to employees of Goodman Group
Equity settled share based payments transactions
Actuarial losses on defined
benefit retirement schemes, net of tax
Acquisition of entities from Goodman Limited
Acquisition of special purpose development
entity with non-controlling interests
Note
19
15
16(a)
18(c)
18(d)
18(e)
Balance at 1 July 2020
Total comprehensive income for the year
Profit for the year
Other comprehensive (loss)/income for the year
Total comprehensive (loss)/income
for the year, net of income tax
Contributions by and distributions to owners
Dividend declared/paid
Issue of shares to employees of Goodman Group
Issue of ordinary shares
Equity settled share based payments transactions
Acquisition of special purpose development
entity with non-controlling interests
Note
19
15
16(a)
16(a)
18(c)
Attributable to Shareholders
Share
capital
$M
Reserves
$M
Retained
earnings
$M
Non-
controlling
interests
$M
Total
$M
Total
equity
$M
696.0
(447.4)
1,034.8
1,283.4
24.7
1,308.1
–
(9.3)
325.5
325.5
–
(9.3)
4.2
0.2
329.7
(9.1)
(9.3)
325.5
316.2
4.4
320.6
–
–
5.2
(8.2)
(164.8)
–
(73.1)
–
–
–
–
–
(73.1)
36.0
5.2
(8.2)
(164.8)
–
(9.8)
–
–
–
–
(82.9)
36.0
5.2
(8.2)
(164.8)
0.7
20.0
0.7
1,414.7
Attributable to Shareholders
Share
capital
$M
Reserves
$M
Retained
earnings
$M
Non-
controlling
interests
$M
Total
$M
Total
equity
$M
732.0
(624.5)
1,287.2
1,394.7
20.0
1,414.7
–
(19.4)
408.4
–
408.4
(19.4)
6.8
(0.5)
415.2
(19.9)
(19.4)
408.4
389.0
6.3
395.3
–
–
–
14.9
–
(110.8)
(110.8)
(9.0)
(119.8)
–
–
–
–
48.6
11.3
14.9
–
–
–
–
4.9
22.2
48.6
11.3
14.9
4.9
1,769.9
–
–
–
–
36.0
–
–
–
–
–
–
–
–
48.6
11.3
–
–
Balance at 30 June 2020
732.0
(624.5)
1,287.2
1,394.7
Year ended 30 June 2021
(expressed in Australian dollars)
Balance at 30 June 2021
791.9
(629.0)
1,584.8
1,747.7
The notes on pages 152 to 187 form part of these consolidated financial statements.
150
Consolidated cash flow statement
for the year ended 30 June 2021
Annual Report 2021
(expressed in Australian dollars)
Cash flows from operating activities
Property income received
Cash receipts from development activities
Other cash receipts from services provided
Property expenses paid
Payments for development activities
Other cash payments in the course of operations
Dividends/distributions received
Interest received
Finance costs paid
Net income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Proceeds from disposal of investment properties
Proceeds from disposal of controlled entities, net of cash disposed
Payments for investment properties
Capital return from equity accounted investments
Payments for equity investments
Payments for plant and equipment
Cash acquired on acquisition of subsidiaries
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of ordinary share
Net repayments of loans with related parties
Payments on derivative financial instruments
Dividends paid to Shareholders
Dividends paid to non-controlling interests
Payments of lease liabilities
Capital contributed by non-controlling interests
Net cash used in financing activities
Net increase in cash held
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at the end of the year
The notes on pages 152 to 187 form part of these consolidated financial statements.
Note
17(b)
17(a)
2021
$M
14.7
1,155.0
251.7
(2.0)
(821.6)
(204.8)
81.7
16.1
(1.0)
(16.2)
473.6
5.4
–
(173.0)
139.8
(243.1)
(0.3)
–
(271.2)
11.3
(83.7)
(42.2)
(73.1)
(9.0)
(8.7)
4.9
(200.5)
1.9
368.2
(11.7)
358.4
2020
$M
20.2
796.1
451.5
(4.8)
(513.8)
(418.3)
77.6
21.1
(0.9)
(52.4)
376.3
4.8
95.6
(97.1)
109.2
(155.7)
(0.1)
37.9
(5.4)
–
(101.0)
–
(90.7)
(9.8)
(11.9)
–
(213.4)
157.5
212.7
(2.0)
368.2
151
Goodman Group
Notes to the consolidated financial statements
(expressed in Australian dollars)
BASIS OF PREPARATION
Going concern
1. Basis of preparation
(a) Statement of compliance
These financial statements have been prepared in accordance
with all applicable Hong Kong Financial Reporting Standards
(HKFRSs), which collective term includes all applicable
individual Hong Kong Financial Reporting Standards, Hong
Kong Accounting Standards (HKASs) and Interpretations
issued by the Hong Kong Institute of Certified Public
Accountants (HKICPA) and accounting principles generally
accepted in Hong Kong. These financial statements also
comply with the applicable requirements of the Hong Kong
Companies Ordinance.
(b) Basis of preparation of the consolidated
financial statements
The measurement basis used in the preparation of the
consolidated financial statements is the historical cost basis
except for investment properties and other financial assets
which are stated at fair value.
The preparation of financial statements in conformity
with HKFRSs requires management to make judgements,
estimates and assumptions that affect the application of
policies and reported amounts of assets, liabilities, income
and expenses. The estimates and associated assumptions
are based on historical experience and various other factors
that are believed to be reasonable under the circumstances,
the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ
from these estimates.
The estimates and underlying assumptions are reviewed on
an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the
revision affects only that period, or in the period of the revision
and future periods if the revision affects both current and
future periods.
As at 30 June 2021, the Consolidated Entity had net current
assets of $7.4 million.
Additionally, in accordance with the stapling agreement
between the Company (GLHK), Goodman Limited (GL) and
Goodman Funds Management Limited as responsible entity
for Goodman Industrial Trust (GIT), on request, each party (and
its subsidiaries) must provide financial support to the other
party (and its subsidiaries). The financial support to the other
party (and its subsidiaries) may include:
+
+
+
+
Lending money or providing financial accommodation
Guaranteeing any loan or other financing facility including
providing any security
Entering into any covenant, undertaking, restraint, negative
pledge on the obtaining of any financial accommodation
or the provision of any guarantee or security in connection
with any financial accommodation
Entering into any joint borrowing or joint financial
accommodation and providing any guarantee, security,
indemnities and undertakings in connection with the
relevant joint borrowing or joint financial accommodation.
A party need not do anything under the above arrangements
to the extent that the party considers that it is not in the
interests of Goodman Group Securityholders as a whole, or
would cause a member of the party’s group to contravene or
breach applicable laws or particular finance arrangements.
On the basis of the above, the consolidated financial
statements have been prepared on a going concern basis.
(c) Accounting for acquisitions of non-controlling interests
Acquisitions of non-controlling interests are accounted for as
transactions with equity holders in their capacity as equity
holders and therefore no gain or loss and no goodwill is
recognised as a result of such transactions.
(d) Foreign currency translation
Functional and presentation currency
Items included in the consolidated financial statements of
each of the Company’s subsidiaries are measured using
the currency of the primary economic environment in which
the entity operates (functional currency). The consolidated
financial statements are presented in Australian dollars, which
is the Company’s functional and presentation currency.
152
Annual Report 2021
Transactions
Foreign currency transactions are translated to each entity’s
functional currency at rates approximating the foreign
exchange rates ruling at the dates of the transactions.
Amounts receivable and payable in foreign currencies at the
reporting date are translated at the rates of exchange ruling
on that date. Resulting exchange differences are recognised in
profit or loss.
Non-monetary assets and liabilities that are measured in terms
of historical cost are translated at rates of exchange applicable
at the date of the initial transaction. Non-monetary items
which are measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair
value was determined.
Translation of controlled foreign operations
The assets and liabilities of foreign operations are translated
into Australian dollars at foreign exchange rates applicable at
the reporting date.
Revenue and expenses are translated at weighted average
rates for the financial year. Exchange differences arising on
translation are taken directly to the foreign currency translation
reserve until the disposal or partial disposal of the operations.
Exchange differences arising on monetary items that form part
of the net investment in a foreign operation are recognised in
the foreign currency translation reserve on consolidation.
(e) Changes in accounting policies
The AASB has issued new or amendments to standards
that are first effective from 1 July 2020 but none of these
have a material impact on the Consolidated Entity’s financial
statements.
(f) Accounting standards issued but not yet effective
The Consolidated Entity has not applied any new standard
or interpretation that is not yet effective for the current
accounting period. None of the new accounting standards or
interpretations is expected to have a significant impact on the
future results of the Consolidated Entity.
(g) Critical accounting estimates used in the preparation
of the consolidated financial statements
The preparation of consolidated financial statements requires
estimates and assumptions concerning the application
of accounting policies and the future to be made by the
Consolidated Entity. Estimates are continually evaluated and
are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances.
The estimates and assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year can be found
in the following notes:
+
+
Note 6 – Property assets
Note 14 – Financial risk management.
The accounting impacts of revisions to estimates are recognised
in the period in which the estimate is revised and in any future
periods affected.
Measurement of fair values
A number of the Consolidated Entity’s accounting policies and
disclosures require the measurement of fair values, for both
financial and non-financial assets and liabilities.
When measuring the fair value of an asset or a liability, the
Consolidated Entity uses market observable data as far as
possible. Fair values are categorised into different levels in a
fair value hierarchy and have been defined as follows:
+
+
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities
Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices)
+
Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
Further information about the assumptions made in measuring
fair values is included in the following notes:
+ Note 6 – Property assets
+ Note 14 – Financial risk management.
153
Goodman Group
Notes to the consolidated financial statements
RESULTS FOR THE YEAR
2. Profit before interest and income tax
Gross property income
Gross property income comprises rental income under operating
leases (net of incentives provided) and amounts billed to
customers for outgoings (e.g. rates, levies, cleaning, security, etc.).
Amounts billed to customers for outgoings are a cost recovery for
the Consolidated Entity and are recognised once the expense has
been incurred. The expense is included in property expenses.
Rental income under operating leases is recognised on a straight-
line basis over the term of the lease contract. Where operating
lease rental income is recognised relating to fixed increases in
rentals in future years, an asset is recognised. This asset is a
component of the relevant investment property carrying amount.
The cost of lease incentives provided to customers is amortised
on a straight-line basis over the life of the lease as a reduction of
gross property income.
Management and development income
The revenue from management and development activities is
measured based on the consideration specified in a contract
with a customer. The Consolidated Entity recognises revenue
when it transfers control over a product or service to a customer.
Management income
Fee income derived from management services relates to
investment management base fees and property services fees
and is recognised and invoiced progressively as the services are
provided. Customers make payments usually either monthly or
quarterly in arrears.
Performance related management income generally relates
to portfolio performance fee income, which is recognised
progressively as the services are provided but only when the
income can be reliably measured and is highly probable of not
being reversed. These portfolio performance fees are typically
dependent on the overall returns of a Partnership relative to
an agreed benchmark return, assessed over the life of the
Partnership, which can vary from one year to seven years. The
returns are impacted by operational factors such as the quality
and location of the portfolio, active property management,
rental income rates and development activity but can also be
significantly affected by changes in global and local economic
conditions. Accordingly, portfolio performance fee revenue is
only recognised towards the end of the relevant assessment
period, as prior to this revenue recognition is not considered to
be sufficiently certain.
In determining the amount of revenue that can be reliably
measured, management prepares a sensitivity analysis to
understand the impact of changes in asset valuations on
the potential performance fee at the assessment date. The
assessment of revenue will depend on the prevailing market
conditions at the reporting date relative to long-term averages
and also the length of time until the assessment date e.g. the
longer the time period to assessment date, the greater the impact
of the sensitivity analysis. The potential portfolio performance
fee revenue is then recognised based on the length of time from
the start of the assessment period to the reporting date as a
proportion of the total assessment period. Where the income is
attributable to development activities or it relates to a combination
of inextricable management and development activities that have
occurred over the performance fee period, then it is reported
as development income, otherwise the income is reported as
management income. The Partnerships make payments in respect
of portfolio performances fees at the end of the performance
periods, once the attainment of the conditions has been verified
and the amount of the fee has been agreed by all parties.
Development income – disposal of inventories
The disposal of inventories is recognised at the point in time
when control over the property asset is transferred to the
customer. This will generally occur on transfer of legal title and
payment in full by the customer. The gain or loss on disposal of
inventories is calculated as the difference between the carrying
amount of the asset at the time of disposal and the proceeds on
disposal (less transaction costs) and is included in profit or loss in
the period of disposal.
Development income – development management services
Fee income from development management services (including
master-planning, development management and overall project
management) is recognised progressively as the services are
provided in proportion to the stage of completion by reference
to costs. Payments are received in accordance with the
achievement of agreed milestones over the development period.
The development period can be up to 24 months for larger and
more complex developments.
Performance related development income includes income
associated with the returns from individual developments under
the Consolidated Entity’s management and performance fee
income that relates to development activity. Income in respect of
individual developments is recognised by the Consolidated Entity
on attainment of the performance related conditions, which is
when the income can be reliably measured and is highly probable
of not being reversed. These amounts are paid by the Partnership
when the amounts have been measured and agreed. Income
associated with development activities as part of a portfolio
assessment is recognised on the same basis as outlined above in
the management income section.
Development income – fixed price development contracts
Certain development activities are assessed as being fixed
price development contracts. This occurs when a signed
contract exists, either prior to the commencement of or during
the development phase, to acquire a development asset from
the Consolidated Entity on completion. Revenue and expenses
relating to these development contracts are recognised in
profit or loss in proportion to the stage of completion of the
relevant contracts by reference to costs. The payments may
be on completion of the development once legal title has been
transferred. The development period can be up to 24 months for
larger and more complex developments.
154
Annual Report 2021
Net (loss)/gain on disposal of investment properties
The disposal of an investment property is recognised at the point in time when control over the property has been transferred to
the purchaser.
Employee benefits
Wages, salaries and annual leave
Wages and salaries, including non-monetary benefits, and annual leave that are expected to be settled within 12 months of the
reporting date, represent present obligations resulting from employees’ services provided to the reporting date. These are calculated
at undiscounted amounts based on rates that are expected to be paid as at the reporting date including related on-costs, such as
workers’ compensation insurance and payroll tax.
Bonuses
A liability is recognised in other payables and accruals for bonuses where there is a contractual obligation or where there is a
past practice that has created a constructive obligation. Liabilities for bonuses that are expected to be settled within 12 months
are measured at the amounts expected to be paid, including related on-costs, when they are settled.
Defined contribution retirement plans
Obligations for contributions to defined contribution retirement plans are recognised as an expense as incurred.
Defined benefit retirement schemes
The net obligation in respect of defined benefit retirement schemes is recognised in the statement of financial position and
is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current
and prior periods, discounting that amount and deducting the fair value of any plan assets. The calculation of defined benefit
obligations is performed annually by a qualified actuary using the projected unit credit method. Remeasurements of the net
defined benefit liability, which comprise actuarial gains and losses and the return on plan assets (excluding interest), are
recognised immediately in other comprehensive income. Net interest expense and other expenses related to defined benefit
retirement schemes are recognised in the income statement.
Profit before interest and income tax has been arrived at after crediting/(charging) the following items:
Management services
Performance related income
Management income
Income from disposal of inventories
Development income from fixed price development contracts
Other development income, including development management1
Net gain on disposal of assets previously classified as held for sale
Net gain on disposal of special purpose development entities
Development income
Inventory cost of sales
Other development expenses
Development expenses
Included in employee expenses are the following items:
Salaries, wages and other benefits
Contributions to defined contribution retirement plans
Employee expenses
Depreciation of plant and equipment
Auditor's remuneration
2021
$M
135.1
53.6
188.7
809.8
98.5
131.1
132.3
–
1,171.7
(619.4)
(65.3)
(684.7)
(163.5)
(3.1)
(166.6)
(9.6)
(1.5)
2020
$M
146.4
130.1
276.5
451.6
35.4
165.3
–
1.3
653.6
(318.8)
(52.7)
(371.5)
(145.5)
(1.3)
(146.8)
(11.7)
(1.2)
1.
Fee revenues from single contractual arrangements involving a combination of inextricable Investment Management and Development Management services
and recognised over the life of the underlying developments projects are classified as development income for statutory reporting purposes. During the period,
$75.2 million (2020: $nil) of such income was recognised.
155
Goodman Group
Notes to the consolidated financial statements
Results for the year (continued)
3. Segment reporting
An operating segment is a component of the Consolidated
Entity that engages in business activities from which it may
earn revenues and incur expenses. The Consolidated Entity
reports the results and financial position of its operating
segments based on the internal reports regularly reviewed
by the Group Chief Executive Officer in order to assess each
segment’s performance and to allocate resources to them.
Operating segment information is reported on a geographic
basis and the Consolidated Entity has determined that its
operating segments are Asia (which consists of Greater China
and Japan), Continental Europe and the United Kingdom.
The activities and services undertaken by the operating
segments include:
+
+
+
Property investment, both through direct ownership
and cornerstone investments in Partnerships
Management activities, both investment and
property management
Development activities, including development of directly
owned assets (predominantly disclosed as inventories)
and management of development activities for the
Consolidated Entity’s Partnerships.
The segment results that are reported to the Group Chief
Executive Officer are based on profit before net finance
expense and income tax expense, and also exclude non-
cash items such as fair value adjustments and impairments,
corporate expenses and incentive based remuneration.
The assets allocated to each operating segment relate
to the properties, which also includes the investments in
Partnerships, and the trade and other receivables associated
with the operating activities, but excludes receivables from
GL, GIT and their controlled entities, income tax receivables
and corporate assets. The liabilities allocated to each
operating segment primarily relate to trade and other payables
associated with the operating activities, but exclude payables
to GL, GIT and their controlled entities, provision for dividends
to Shareholders, income tax payables and corporate liabilities.
The accounting policies used to report segment information
are the same as those used to prepare the consolidated
financial statements for the Consolidated Entity.
For the purpose of operating segment reporting, there are no
material intersegment revenues and costs.
Information regarding the operations of each reportable
segment is included on the following pages.
156
Annual Report 2021
Information about reportable segments
Statement of comprehensive income
External revenues
Gross property income
Management income
Development income
Distributions from investments
Total external revenues
Asia
Continental
Europe
United
Kingdom
Total
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
6.2
1.8
8.4
77.8
186.4
106.7
10.5
88.0
1.0
4.2
9.2
2.1
15.6
21.5
188.7
276.5
129.9
160.1
796.5
476.2
245.3
17.3
1,171.7
653.6
0.8
–
–
–
–
–
0.8
–
214.7
348.3
911.6
574.7
250.5
28.6 1,376.8
951.6
Analysis of external revenues: Revenues from contracts with customers
Assets and services transferred at a point in time
10.3
15.3
729.9
467.0
228.8
3.7
969.0
486.0
Assets and services transferred over time
197.7
331.5
174.0
99.6
20.8
15.6
392.5
446.7
Other revenue
Rental income (excludes outgoings recoveries)
Dividends from investments
Total external revenues
5.9
0.8
1.5
–
7.7
–
8.1
–
0.9
–
9.3
–
14.5
0.8
18.9
–
214.7
348.3
911.6
574.7
250.5
28.6 1,376.8
951.6
Reportable segment profit before income tax
205.4
259.6
376.5
219.7
20.4
6.1
602.3
485.4
Other key components of financial performance
included in reportable segment profit before income tax
Share of net results of equity accounted investments
in Partnerships (before fair value adjustments)
Material non-cash items not included in reportable
segment profit before income tax
Share of fair value adjustments attributable to investment
properties in Partnerships
Statement of financial position
Reportable segment assets
60.4
68.8
6.5
13.3
6.1
4.9
73.0
87.0
44.2
8.2
19.2
1.7
26.8
10.1
90.2
20.0
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
1,573.6 1,334.5 1,030.2
880.0
752.2
822.2 3,356.0 3,036.7
Investments in Partnerships (included in reportable segment assets)
908.0
854.7
154.0
140.5
408.0
281.0 1,470.0 1,276.2
Total non-current assets
Reportable segment liabilities
1,306.6
991.7
77.9.6
422.0
673.6
523.4 2,759.8 1,937.1
137.0
96.1
106.3
98.7
85.8
103.2
329.1
298.0
157
Goodman Group
Notes to the consolidated financial statements
Results for the year (continued)
3 Segment reporting (continued)
Reconciliation of reportable segment revenue, profit or loss, assets and liabilities
Revenue
Total revenue for reportable segments
Consolidated revenues
Profit or loss
Total profit before income tax for reportable segments
Corporate expenses not allocated to reportable segments
Valuation and other adjustments not included in reportable segment profit before income tax:
– Net loss from fair value adjustments on investment properties
– Share of fair value adjustments attributable to investment properties in Partnerships
– Share of fair value adjustments on derivative financial instruments in Partnerships
– Share based payments expense
Net finance expense – refer to note 12
Consolidated profit before income tax
Assets
Total assets for reportable segments
Other unallocated amounts1
Consolidated total assets
Liabilities
Total liabilities for reportable segments
Other unallocated amounts1
Consolidated total liabilities
1. Other unallocated amounts comprise principally receivables from and payables to GL, GIT and their controlled entities.
2021
$M
1,376.8
1,376.8
602.3
(81.5)
520.8
–
90.2
1.5
(124.0)
(61.1)
2020
$M
951.6
951.6
485.4
(41.6)
443.8
(1.2)
20.0
–
(57.6)
(35.1)
427.4
369.9
3,356.0
1,010.2
3,036.7
602.3
4,366.2
3,639.0
329.1
2,267.2
2,596.3
298.0
1,926.3
2,224.3
158
Annual Report 2021
4. Income tax expense
Income tax for the period comprises current tax and
movements in deferred tax assets and liabilities. Current
tax and movements in deferred tax assets and liabilities are
recognised in profit or loss except to the extent that they
relate to items recognised in other comprehensive income or
directly in equity, in which case the relevant amounts of tax
are recognised in other comprehensive income or directly in
equity respectively.
Current tax is the expected tax payable on the taxable income
for the period, using tax rates enacted or substantively enacted
at the reporting date, and any adjustment to tax payable in
respect of previous years.
Deferred tax assets and liabilities arise from deductible and
taxable temporary differences respectively, being the differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and their tax bases. Deferred tax assets
also arise from unused tax losses and unused tax credits. Apart
from differences which arise on initial recognition of assets and
liabilities, all deferred tax liabilities and all deferred tax assets,
to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised, are recognised.
The amount of deferred tax recognised is measured based on
the expected manner of realisation or settlement of the carrying
amount of the assets and liabilities, using tax rates enacted or
substantively enacted at the reporting date. Deferred tax assets
and liabilities are not discounted.
(a) Taxation in the consolidated statement
of comprehensive income
Current tax expense – Hong Kong profits tax
Current year
Adjustment for prior periods
Current tax expense – overseas
Current year
Adjustment for prior periods
Deferred tax expense
Origination and reversal of temporary differences
Total income tax expense
2021
$M
2020
$M
(15.1)
1.6
(41.4)
1.2
(13.5)
(40.2)
(9.2)
5.7
(3.5)
(34.8)
2.0
(32.8)
4.8
4.8
32.8
32.8
(12.2)
(40.2)
The provision for Hong Kong profits tax for the year ended
30 June 2021 is calculated at 16.5% (2020: 16.5%) of the
estimated assessable profits for the year. Taxation for overseas
subsidiaries is charged at the appropriate current rates of
taxation ruling in the relevant countries.
159
Goodman Group
Notes to the consolidated financial statements
Results for the year (continued)
4 Income tax expense (continued)
(b) Reconciliation between income tax expense and accounting profit at applicable tax rates
Profit before income tax
Notional tax on profit before income tax, calculated at the rates applicable to profits in the countries concerned
(Increase)/decrease in income tax due to:
– Current year losses for which no deferred tax asset was recognised
– Non-assessable income
– Non-deductible expense
– Utilisation of previously unrecognised tax losses
– Adjustment for prior periods
Income tax expense
(c) Net income tax payable
Net balance at the beginning of the year
Decrease/(increase) in current net tax payable due to:
– Net income taxes paid
– Net income tax expense on current year’s profit
– Adjustment for prior periods
– Other
Net balance at the end of the year
Current tax receivables
Current tax payables
2021
$M
427.4
(133.3)
(15.3)
172.8
(47.1)
3.4
7.3
(12.2)
2021
$M
(47.4)
16.2
(24.3)
7.3
3.5
(44.7)
4.2
(48.9)
(44.7)
2020
$M
369.9
(98.1)
(9.4)
104.5
(49.9)
9.5
3.2
(40.2)
2020
$M
(27.1)
52.4
(76.2)
3.2
0.3
(47.4)
0.8
(48.2)
(47.4)
(d) Deferred tax assets and liabilities
Deferred tax assets of $15.2 million (2020: $6.3 million) arising from employee benefits and deferred tax liabilities of
$1.6 million (2020: $0.9 million) arising from other receivables were recognised in the consolidated statement of financial position.
Deferred tax assets of $236.6 million (2020: $71.8 million) arising primarily from tax losses have not been recognised
by the Consolidated Entity.
5. Profit attributable to equity shareholders of the Company
The consolidated profit attributable to equity shareholders of the Company includes a profit of $329.9 million (2020: $395.0 million)
which has been dealt with in the financial statements of the Company.
160
Annual Report 2021
OPERATING ASSETS AND LIABILITIES
Classification of investment properties
Investment properties are classified as either properties under
development or stabilised properties. Investment properties
under development include land, new investment properties
in the course of construction and investment properties that
are being redeveloped. Stabilised investment properties
are all investment properties not classified as being under
development and would be completed properties that are
leased or are available for lease to customers.
For investment properties under development, the carrying
values are reviewed by management at each reporting date
to consider whether they reflect their fair values and at
completion external valuations are obtained to determine the
fair values.
For stabilised investment properties, independent valuations
are obtained at least every three years to determine the fair
values. At each reporting date between obtaining independent
valuations, the carrying values are reviewed by management
to ensure they reflect the fair values.
Deposits for investment properties
Deposits and other costs associated with acquiring investment
properties that are incurred prior to obtaining legal title
are recorded at cost and disclosed as other assets in the
consolidated statement of financial position.
(b) Summary of the Consolidated Entity’s investment
in property assets
Directly held properties:
Inventories
Current
Non-current
Note
2021
$M
2020
$M
6(d)
6(d)
106.4
1,034.5
405.1
553.2
1,140.9
958.3
Investment properties
Stabilised investment properties
6(e)
163.9
163.9
7.2
7.2
Property held by Partnerships:
Investments accounted for using
the equity method – JVs
6(f)
1,470.0
1,276.2
1,470.0
1,276.2
6. Property assets
(a) Types of property assets
Investment in property assets includes both inventories and
investment properties (including those under development),
which may be held either directly or through investments
in Partnerships.
Inventories
Inventories relate to land and property developments that are
held for sale or development and sale in the normal course
of business. Inventories are carried at the lower of cost or net
realisable value. The calculation of net realisable value requires
estimates and assumptions which are regularly evaluated and are
based on historical experience and expectations of future events
that are believed to be reasonable under the circumstances.
Inventories are classified as non-current assets unless they are
contracted to be sold within 12 months of the end of the reporting
period, in which case they are classified as current assets.
Investment properties
Investment properties comprise investment interests in land
and buildings held for the purpose of leasing to produce rental
income and/or for capital appreciation. Investment properties
are carried at fair value. The calculation of fair value requires
estimates and assumptions which are continually evaluated
and are based on historical experience and expectations of
future events that are believed to be reasonable under the
circumstances. Investment properties are not depreciated as
they are subject to continual maintenance and regularly revalued
on the basis described below. Changes in the fair value of
investment properties are recognised directly in profit or loss.
Components of investment properties
Land and buildings (including integral plant and equipment)
comprising investment properties are regarded as composite
assets and are disclosed as such in the consolidated
financial statements.
Investment property carrying values include the costs of
acquiring the assets and subsequent costs of development,
including costs of all labour and materials used in
construction, costs of managing the projects, holding costs
and borrowing costs incurred during the development periods.
Amounts provided to customers as lease incentives and
assets relating to fixed rental income increases in operating
lease contracts are included within investment property
values. Lease incentives are amortised over the term of the
lease on a straight-line basis. Direct expenditure associated
with leasing a property is also capitalised within investment
property values and amortised over the term of the lease.
161
Goodman Group
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
6 Property assets (continued)
(c) Estimates and assumptions in determining
property carrying values
Inventories
For both inventories held directly and inventories held in
Partnerships, external valuations are not performed but
instead valuations are determined using the feasibility studies
supporting the land and property developments. The end
values of the developments in the feasibility studies are based
on assumptions such as capitalisation rates, letting up periods
and incentives that are consistent with those observed in the
relevant market. If the feasibility study calculations indicate
that the forecast cost of a completed development will exceed
the net realisable value, then the inventories are impaired.
Stabilised investment properties
The fair value of stabilised investment properties is based on
current prices in an active market for similar properties in the
same location and condition and subject to similar lease and
other contracts. The current price is the estimated amount for
which a property could be exchanged between a willing buyer
and a willing seller in an arm’s length transaction after proper
marketing wherein the parties had each acted knowledgably,
prudently and without compulsion.
Approach to determination of fair value
The approach to determination of fair value of investment
properties is applied to both investment properties held
directly and investment properties held in Partnerships.
Valuations are determined based on assessments and estimates
of uncertain future events, including upturns and downturns in
property markets and availability of similar properties, vacancy
rates, market rents and capitalisation and discount rates. Recent
and relevant sales evidence and other market data are taken into
account. Valuations are either based on an external, independent
valuation or on an internal valuation.
External valuations are undertaken only where market
segments were observed to be active. In making the
determination of whether a market segment is active, the
following characteristics are considered:
Function of the asset (distribution/warehouse
or suburban office)
Location of the asset (city, suburb or regional area)
Carrying value of the asset (categorised by likely
appeal to private (including syndicates), national and
institutional investors)
Each property asset is assessed and grouped with assets
in the same or similar market segments. Information on all
relevant recent sales is also analysed using the same criteria
to provide a comparative set. Unless three or more sales are
observed in an individual market segment (taken together with
any comparable market segments as necessary), that market
segment is considered inactive.
Where a market segment is observed to be active, then
external independent valuations are performed for stabilised
investment properties where there has been more than a 25
basis point movement in capitalisation rates and/or there has
been a material change in tenancy profile (including changes in
the creditworthiness of a significant customer that may have a
material impact on the property valuation), and/or there has been
significant capital expenditure, and/or there has been a change
in use (or zoning) of the asset and/or it has been three years
since the previous external independent valuation. For all other
stabilised investment properties in an active market segment, an
internal valuation is performed based on observable capitalisation
rates and referenced to independent market data.
Where a market segment is observed to be inactive, no
external, independent valuations are performed and internal
valuations are undertaken based on discounted cash flow
(DCF) calculations. The DCF calculations are prepared over a
10 year period. The key inputs considered for each individual
calculation are rental growth rates, discount rates, market
rental rates and letting up incentives. Discount rates are
computed using the 10 year bond rate or equivalent in each
jurisdiction plus increments to reflect country risk, tenant
credit risk and industry risk. Where possible, the components
of the discount rate are benchmarked to available market data.
Market assessment
The investment market for industrial, logistics and warehousing
properties has been strong during FY21. At 30 June 2021, the
Board has been able to assess that all markets in which the
Consolidated Entity operated were active and as a consequence,
no adjustments have been made to the carrying values of the
Consolidated Entity’s stabilised investment property portfolios on
the basis of internally prepared discounted cash flow valuations.
The overall weighted average capitalisation rates for the divisional
portfolios (including Partnerships) are set out in the table below:
Total portfolio weighed average
capitalisation rate
2021
%
2020
%
5.4
3.7
4.1
5.6
4.3
4.4
Categorisation as primary or secondary based on a
combination of location, weighted average lease expiry,
quality of tenant covenant (internal assessment based
on available market evidence) and age of construction.
Asia
Continental Europe
United Kingdom
+
+
+
+
162
Annual Report 2021
Sensitivity analysis
The fair value measurement approach for directly held investment properties has been categorised as a Level 3 fair value based
on the inputs to the valuation method used (see note 1(g)). The stabilised investment property valuations are most sensitive to
the following inputs:
+
+
+
Capitalisation rates
Market rents
Level of incentives provided to customers and/or the amount of vacant time on expiry of a lease.
The impacts on the Consolidated Entity’s financial position that would arise from the changes in the above assumptions are
set out in the table below. This illustrates the impacts on the Consolidated Entity in respect of both the directly held stabilised
investment properties and its share of those stabilised investment properties held by Partnerships.
Directly held properties
Partnerships1
Book value at 30 June 2021
Changes in capitalisation rates:
Increase in capitalisation rates +50bps
Increase in capitalisation rates +25bps
Decrease in capitalisation rates -25bps
Decrease in capitalisation rates -50bps
Changes in market rents:
Decrease in rents -5%
Decrease in rents -2.5%
Increase in rents +2.5%
Increase in rents +5%
Changes in voids/incentives:2
Increase in voids/incentives +3 months
Increase in voids/incentives +6 months
1. Reflects the Consolidated Entity’s share in Partnerships.
2. On assumed lease expiries over the next 12 months.
Investment properties under development
$M
163.9
(17.3)
(9.1)
10.3
22.0
(5.0)
(2.5)
2.5
5.0
(1.0)
(2.0)
$M
2,985.9
(312.6)
(165.1)
186.2
397.8
(132.3)
(66.1)
66.1
132.3
(10.2)
(20.5)
External valuations are generally not performed for investment properties under development, but instead valuations are
determined using the feasibility studies supporting the developments. The end values of the developments in the feasibility studies
are based on assumptions such as capitalisation rates, letting up periods and incentives that are consistent with those observed
in the relevant market adjusted for a profit and risk factor. This profit and risk factor is dependent on the function, location, size and
current status of the development and is generally in a market range of 10% to 15%. This adjusted end value is then compared
to the forecast cost of a completed development to determine whether there is an increase or decrease in value.
This practice of determining fair value by reference to the development feasibility is generally also applied for the Consolidated
Entity’s investments in Partnerships. However, certain Partnerships do obtain independent valuations for investment properties
under development each financial year.
163
Goodman Group
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
6 Property assets (continued)
(d) Inventories
Current
Land and development properties
Non-current
Land and development properties
2021
$M
106.4
106.4
1,034.5
1,034.5
During the current and prior financial year, no impairment losses were recognised on land and development properties.
(e) Investment properties
Reconciliation of carrying amount of directly held investment properties
Carrying amount at the beginning of the year
Cost of acquisition:
– On acquisition of controlled entities
– Other acquisitions
Capital expenditure
Carrying value of properties disposed
Net gain from fair value adjustments
Effect of foreign currency translation
Carrying amount at the end of the year
Analysed by segment:
Asia
United Kingdom
2021
$M
7.2
–
163.0
1.2
(7.4)
–
(0.1)
163.9
137.7
26.2
163.9
2020
$M
405.1
405.1
553.2
553.2
2020
$M
–
13.1
–
0.2
(4.6)
(1.2)
(0.3)
7.2
–
7.2
7.2
(f) Investments accounted for using the equity method
Joint ventures
A joint venture (JV) is an arrangement (referred to by the Consolidated Entity as a Partnership) in which the Consolidated Entity
is considered to have joint control for accounting purposes, whereby the Consolidated Entity has rights to the net assets of
the arrangement, rather than rights to its assets and obligations for its liabilities. In the consolidated financial statements,
investments in JVs are accounted for using the equity method. Investments in JVs are carried at the lower of the equity
accounted amount and recoverable amount. The Consolidated Entity’s share of the JVs’ net profit or loss is recognised in the
consolidated profit or loss from the date the arrangement commences to the date the arrangement ceases. Movements in
reserves are recognised directly in the consolidated reserves.
Transactions eliminated on consolidation
Unrealised gains arising from asset disposals with JVs, including those relating to contributions of non-monetary assets on
establishment, are eliminated to the extent of the Consolidated Entity’s interest. Unrealised gains relating to JVs are eliminated
against the carrying amount of the investment. Unrealised losses are eliminated in the same way as unrealised gains unless they
evidence an impairment of an asset.
164
Annual Report 2021
The Consolidated Entity’s principal Partnerships are set out below:
Consolidated
share of net
results recognised
Consolidated
ownership
interest
Country of
establishment
2021
$M
2020
$M
2021
%
2020
%
Consolidated
investment
carrying amount
2021
$M
2020
$M
Name
Property investment
KWASA Goodman Germany (KGG)
Luxembourg
27.6
13.0
19.2
20.5
151.9
137.4
Property development
Goodman Japan
Development Partnership (GJDP)
Property investment and development
Japan
40.3
49.4
50.0
50.0
73.9
116.8
Goodman China Logistics Partnership (GCLP) Cayman Islands
Goodman UK Partnership (GUKP)1
United Kingdom
Other JVs
65.2
32.9
(1.3)
30.3
14.8
(0.5)
20.0
33.3
20.0
33.3
832.7
404.0
7.5
737.2
277.0
7.8
164.7
107.0
1,470.0
1,276.2
1. GUKP incorporated two separate investment vehicles in which the investment partners, including the Consolidated Entity, had the same ownership interests.
GJDP undertakes property development activities, with completed developments sold at, or shortly after, completion depending
on leasing status. The Consolidated Entity’s other Partnerships have a long-term remit to hold investment properties to earn
rental income and for capital appreciation, although they will undertake developments when an appropriate opportunity arises.
The reconciliation of the carrying value at the beginning of the year to the carrying value at the end of the year is set out as follows:
Movements in carrying amount of investments in JVs
Carrying amount at the beginning of the year
Share of net results after tax (before fair value adjustments)
Share of fair value adjustments attributable to investment properties after tax
Share of fair value adjustments on derivative financial instruments
Share of net results
Share of movements in reserves
Acquisitions
Capital return
Disposals
Transfer to assets held for sale
Dividends/distributions received and receivable
Effect of foreign currency translation
Carrying amount at the end of the year
2021
$M
2020
$M
1,276.2
1,226.9
73.0
90.2
1.5
164.7
3.1
245.9
(143.2)
–
–
(76.4)
(0.3)
87.0
20.0
–
107.0
(25.8)
153.0
(116.0)
(0.3)
(11.2)
(71.3)
13.9
1,470.0
1,276.2
165
Goodman Group
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
6 Property assets (continued)
Summary financial information of JVs
The following table summarises the financial information of the material Partnerships as included in their own financial statements.
The table also reconciles the summarised financial information to the carrying amount of the Consolidated Entity’s interest in the JVs.
Summarised statement of financial position
Current assets
Cash and cash equivalents
Other current assets
Total current assets
Total non-current assets
Current liabilities
Financial liabilities (excluding trade payables and other provisions)
Other current liabilities
Total current liabilities
Non-current liabilities
Financial liabilities (excluding trade payables and other provisions)
Other non-current liabilities
Total non-current liabilities
Net assets (100%)
Consolidated ownership interest (%)
Consolidated share of net assets
Shareholder loans1
Other items, including acquisition costs
KGG
GJDP
GCLP
GUKP
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
2021
$M
2020
$M
25.3
4.4
36.5
6.5
79.9
10.6
112.6
16.1
281.3
84.4
231.1
73.5
43.4
1,490.3
38.6
2.0
29.7
43.0
90.5
128.7
365.7
304.6
1,533.7
40.6
1,441.9
1,215.1
254.2
378.5
5,537.5
4,741.5
–
813.4
–
17.4
–
88.8
–
3.9
–
28.7
89.6
2,707.0
220.7
2,515.9
–
36.1
–
15.5
17.4
88.8
3.9
28.7
2,796.6
2,736.6
36.1
15.5
505.8
159.3
665.1
789.1
19.2
151.9
–
–
460.8
37.2
188.6
4.3
232.0
12.8
757.7
613.7
390.1
509.8
287.0
–
498.0
192.9
244.8
1,371.4
899.9
287.0
–
–
–
671.3
147.9
233.7
1,735.2
1,409.6
1,210.6
838.5
20.5
137.4
–
–
50.0
73.9
–
–
50.0
116.8
–
–
20.0
347.0
482.3
3.4
20.0
281.9
452.0
3.3
33.3
403.1
–
0.9
33.3
279.2
–
(2.2)
Carrying amount of interest in JV
151.9
137.4
73.9
116.8
832.7
737.2
404.0
277.0
Summarised statement of comprehensive income
Revenue
Net finance expense/(income)
Income tax expense
Profit and total comprehensive income (100%)
Consolidated share of profit
and total comprehensive income
Dividends/distributions received
and receivable by the Consolidated Entity
100.0
(5.6)
(22.3)
80.2
492.5
–
(2.1)
80.6
519.6
(0.8)
(3.1)
98.8
193.6
(19.2)
(37.4)
313.4
193.3
(22.4)
(23.9)
22.4
62.9
(8.3)
(4.7)
189.7
28.5
(3.7)
–
98.7
17.0
0.1
–
44.5
27.6
13.0
40.3
49.4
67.8
4.5
32.9
14.8
13.8
13.7
52.1
54.5
6.1
3.1
4.6
–
1.
Shareholder loans have been provided by investors of GCLP in proportion to their ownership interest. The shareholder loans are interest free, unsecured and have
no fixed terms of repayment. The shareholder loans are not expected to be repaid within 12 months from the end of the reporting period and the Directors consider
the loans to form part of the Consolidated Entity’s investment in GCLP.
166
Annual Report 2021
7. Receivables
Non-derivative financial assets
Impairment
Non-financial assets
The carrying amounts of the Consolidated Entity’s assets
(except inventories, refer to note 6(d); and deferred tax
assets, refer to note 4) are reviewed at each reporting date
to determine whether there is any indication of impairment.
If such indication exists, the asset is written down to the
recoverable amount. The impairment is recognised in profit or
loss in the reporting period in which it occurs.
An impairment loss is recognised whenever the carrying
amount of an asset or its cash-generating unit exceeds its
recoverable amount. Impairment losses are recognised in
profit or loss, unless an asset has previously been revalued,
in which case the impairment loss is recognised as a reversal
to the extent of that previous revaluation, with any excess
recognised through profit or loss.
Impairment losses recognised in respect of cash-generating
units are allocated to the carrying amount of any identified
intangible asset and then to reduce the carrying amount of the
other assets in the unit (group of units) on a pro rata basis.
Financial assets and contract assets
The Consolidated Entity recognises an impairment loss
allowance for expected credit losses (ECLs) on financial assets
measured at amortised cost and contract assets. Financial
assets measured at amortised cost include cash and cash
equivalents, trade receivables, amounts and loans due from
related parties and other receivables.
Other financial assets measured at fair value are not subject to
the ECL assessment.
The Consolidated Entity initially recognises loans and
receivables and deposits on the date that they are originated.
All other financial assets are recognised initially on the trade
date at which the Consolidated Entity becomes a party to the
contractual provisions of the instrument.
The Consolidated Entity derecognises a financial asset when
the contractual rights to the cash flows from the asset expire,
or it transfers the right to receive the contractual cash flows
on the financial asset in a transaction in which substantially all
the risks and rewards of ownership of the financial asset are
transferred. Any interest in transferred financial assets that is
created or retained by the Consolidated Entity is recognised
as a separate asset or liability.
Financial assets and liabilities are offset and the net amount
presented in the consolidated statement of financial position
when, and only when, the Consolidated Entity has a legal right to
offset the amounts and intends to either settle on a net basis or
to realise the asset and settle the liability simultaneously.
Loans and receivables
Loans and receivables are financial assets with fixed or
determinable payments that are not quoted in an active
market. Such assets are recognised initially at fair value plus
any directly attributable transaction costs. Subsequent to
initial recognition, loans and receivables are measured at
amortised cost using the effective interest rate method, less
allowance for impairment of doubtful debts, except where
the receivables are interest-free loans made to related parties
without any fixed repayment terms or the effect of discounting
would be immaterial. In such cases, the receivables are stated
at cost less allowance for impairment of doubtful debts.
Loans and receivables comprise trade and other receivables,
amounts due from related parties and loans to related parties.
Amounts recoverable on development contracts
Amounts recoverable on development contracts arise
when the Consolidated Entity contracts to sell a completed
development asset either prior to or during the development
phase. The receivables are stated at cost plus profit
recognised to date less an allowance for foreseeable losses
and less amounts already billed.
167
Goodman Group
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
7 Receivables (continued)
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all expected cash
shortfalls. In measuring ECLs, the Consolidated Entity takes into account information about past events, current conditions and
forecasts of future economic conditions.
Impairment loss allowances for trade receivables, amounts due from related parties, other receivables and contract assets are
measured at an amount equal to a lifetime ECL. Lifetime ECLs are losses that are expected to result from all possible default
events over the expected lives of the items to which the ECL model applies.
The Consolidated Entity recognises an impairment loss allowance equal to the expected losses within 12 months after the
reporting date on loans to related parties, unless there has been a significant increase in credit risk of the loans since initial
recognition, in which case the loss allowance is measured at an amount equal to lifetime ECLs.
Current
Trade receivables
Other receivables
Amounts due from related parties
Loans to related parties
Non-current
Loans to related parties
Note
21(c)
21(c)
2021
$M
12.4
94.0
75.3
562.6
744.3
276.2
276.2
2020
$M
11.1
61.8
106.3
384.4
563.6
279.0
279.0
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. All non-
current receivables of the Consolidated Entity are due within five years from the reporting date. There is no material difference between
the carrying values and the fair values of receivables.
Trade receivables
No trade receivables were impaired at 30 June 2021 and 2020. There are no significant overdue trade receivables at 30 June 2021.
Other receivables
At 30 June 2021, none of the other receivables balance was overdue or impaired (2020: $nil).
Amounts due from related parties
At 30 June 2021, none of the amounts due from related parties was overdue or impaired (2020: $nil). Amounts due from related
parties are typically repayable within 30 days. The amounts due from related parties are unsecured.
Loans to related parties
Loans to related parties principally relate to loans to fellow subsidiaries of GL and GIT and loans to JVs. Refer to note 21(c) for
details of loans to related parties. During the year, no impairment losses were recognised on loans to related parties (2020: $nil).
The loans to related parties are unsecured.
168
Annual Report 2021
8. Contract balances
Contract assets primarily comprise amounts recoverable from fixed price development contracts (disclosed net of any payments
received on account) and accrued performance fee income where the Consolidated Entity assesses that the income can be
reliably measured.
Contract liabilities primarily comprise deposits and other amounts received in advance for development contracts and rental guarantees.
The following table provides an analysis of receivables from contracts with customers (excluding rental income receivables), contract
assets and contract liabilities at the reporting dates:
Current
Receivables from contracts with customers, which are included in trade receivables,
other receivables and amounts due from related parties
Contract assets
Contract liabilities
Non-current
Contract liabilities
2021
$M
87.2
55.7
4.8
1.0
2020
$M
110.2
25.1
12.3
1.5
Significant changes in the contract assets and the contract liabilities balances during the year are set out below:
2021
2020
Contract
assets
$M
Contract
liabilities
$M
Contract
assets
$M
Contract
liabilities
$M
Balance at the beginning of the year
25.1
13.8
279.5
Revenue recognised that was included in the contract liability
balance at the beginning of the year
Increases due to cash received, excluding amounts recognised
as revenue during the year
Transfers from contract assets to receivables
Increase due to changes in the measure of progress during the year
Effect of foreign currency translation
Balance at the end of the year
Current contract assets and liabilities
Non-current contract liabilities
8.2
(1.6)
7.2
–
–
–
–
–
(70.5)
101.1
–
(7.7)
–
–
–
(0.3)
–
–
(729.0)
464.5
10.1
55.7
5.8
25.1
13.8
55.7
–
55.7
4.8
1.0
5.8
25.1
–
25.1
12.3
1.5
13.8
Transaction price allocated to the remaining contract obligations
The amount of the transaction price allocated to the remaining performance obligations under the Consolidated Entity’s existing
contracts is $nil (2020: $14.3 million).
In addition, the Consolidated Entity receives investment management, development management and property services fees under
various contracts that it has with its Partnerships. These contracts are for varying lengths of time and are typically transacted on
terms that are consistent with market practice. The revenues under these contracts are linked to the AUM, total development
project costs or gross property income of the Partnerships and are invoiced as the services are provided.
169
Goodman Group
Notes to the consolidated financial statements
Operating assets and liabilities (continued)
9. Assets held for sale
In the prior year, the Consolidated Entity entered into an
agreement with a third party to dispose a portfolio of property
assets and the Consolidated Entity’s operating platform in the
Czech Republic, Hungary, Poland and Slovakia. The disposal
was completed on 8 July 2020. At 30 June 2020, the directly
held assets and liabilities to be disposed were presented as
a disposal group held for sale and comprised the following
assets and liabilities within the Continental Europe segment:
Cash
Receivables
Inventories
Investments accounted for using the equity method
Other assets
Note
17(a)
Assets held for sale
Payables
Loans from related parties
Lease liabilities
Liabilities held for sale
2020
$M
10.8
6.5
89.1
11.2
7.0
124.6
5.5
14.6
6.6
26.7
No impairment losses were recognised in the current and prior year in
respect of the disposal group.
10. Payables
Non-derivative financial liabilities
The Consolidated Entity initially recognises debt securities
issued and subordinated liabilities on the date that they are
originated. All other financial liabilities are recognised initially
on the trade date at which the Consolidated Entity becomes
a party to the contractual provisions of the instrument.
The Consolidated Entity derecognises a financial liability when
the contractual obligations are discharged or cancelled or expire.
Financial assets and liabilities are offset and the net amount
presented in the consolidated statement of financial position
when, and only when, the Consolidated Entity has a legal right
to offset the amounts and intends to either settle on a net basis
or to realise the asset and settle the liability simultaneously.
The Consolidated Entity has classified non-derivative financial
liabilities into the other financial liabilities category. Such
financial liabilities are recognised initially at fair value plus
any directly attributable transaction costs. Subsequent
to initial recognition, these financial liabilities are measured
at amortised cost using the effective interest rate method.
Other financial liabilities comprise trade payables, other
payables and accruals and contract and lease liabilities.
Note
2021
$M
2020
$M
50.3
201.2
4.8
6.7
63.0
114.7
12.3
10.5
263.0
200.5
64.4
1.0
59.3
38.2
1.5
17.8
124.7
57.5
8
11
8
11
Current
Trade payables
Other payables and accruals
Contract liabilities
Lease liabilities
Non-current
Other payables and accruals
Contract liabilities
Lease liabilities
11. Leases
The Consolidated Entity leases office buildings, motor vehicles
and office equipment. Certain investment properties and
developments classified as inventories are also built on land
held under leasehold interests.
The Consolidated Entity recognises a right of use asset and
a lease liability at the lease commencement date. The right
of use asset is initially measured at cost plus any direct costs
incurred and an estimate of costs to restore the underlying
asset or the site on which it is located, less any lease
incentives received.
The lease liability is initially measured at the present value of
the lease payments that are not paid at the commencement
date, discounted using the lessee’s incremental borrowing
rate. After initial recognition, the lease liability is measured at
amortised cost and interest expense is calculated using the
effective interest method. The lease liability is remeasured
when there is a change in future lease payments arising from
a change in an index or rate, or there is a change arising from
the reassessment of whether Goodman will be reasonably
certain to exercise an extension or termination option.
The right of use assets in respect of office buildings, motor
vehicles and office equipment are depreciated using the
straight-line method over the period of the lease. Right of
use assets that meet the definition of investment property
are carried at fair value in accordance with note 6(a). Ground
leases of development land that are classified as inventories
are not depreciated but are assessed at each reporting date
for impairments to ensure they are recorded at the lower of
cost and net realisable value.
170
Annual Report 2021
Information about leases for which the Consolidated Entity
is a lessee is detailed below:
CAPITAL MANAGEMENT
12. Finance income and expense
2021
$M
20201
$M
Finance income
Right of use assets
Inventories
Investment properties
Property, plant and equipment
Lease liabilities
Current
Non-current
315.5
137.7
12.1
465.3
6.7
59.3
66.0
122.9
–
18.9
141.8
10.5
17.8
28.3
1.
The comparative figures for inventories has been updated to include right
of use assets for which the lease payments have been made upfront.
The following were recognised during the year:
Additions to right of use assets
Depreciation of right of use assets
Interest expense on lease liabilities
Cash outflows on lease liabilities
2021
$M
344.3
7.6
0.5
8.7
2020
$M
52.3
9.8
0.9
11.9
Interest is recognised on an accruals basis using the effective
interest rate method, and, if not received at the reporting date,
is reflected in the consolidated statement of financial position
as a receivable.
Finance expense
Expenditure incurred in obtaining debt finance is offset against
the principal amount of the interest bearing liability to which
it relates, and is recognised as a finance cost on an effective
interest rate basis over the life of the facility or until the
facility is significantly modified. Where a facility is significantly
modified, any unamortised expenditure in relation to that
facility and incremental expenditure incurred in modifying the
facility are recognised as a finance cost in the financial year in
which the significant modification occurs.
Finance costs relating to a qualifying asset are capitalised as
part of the cost of that asset using a weighted average cost
of debt. Qualifying assets are assets which take a substantial
time to get ready for their intended use or sale. All other finance
costs are expensed using the effective interest rate method.
Finance income
Interest income on loans to:
– Related parties
– Other parties
Interest income from derivatives
Finance expense
Interest expense from
related party loans
Other borrowing costs
Fair value adjustments on
derivative financial instruments
Foreign exchange losses
Capitalised borrowing costs
Note
2021
$M
2020
$M
21
21
12.7
0.8
8.3
21.8
(38.9)
(1.1)
(20.1)
(32.2)
9.4
10.2
1.1
12.4
23.7
(44.9)
(1.2)
(21.8)
–
9.1
(82.9)
(58.8)
(61.1)
(35.1)
Borrowing costs were capitalised to inventories and
investment properties under development during the financial
year at rates between 1.0% and 10.6% per annum (2020:
2.0% and 4.2% per annum).
171
Goodman Group
Notes to the consolidated financial statements
Capital management (continued)
13. Other financial assets and liabilities
Other financial assets and liabilities are recognised initially
on the trade date at which the Consolidated Entity become a
party to the contractual provisions of the instrument.
Derivative financial instruments and hedging
The Consolidated Entity uses derivative financial instruments
to hedge its economic exposure to foreign exchange and
interest rate risks arising from operating, investing and
financing activities. In accordance with its treasury policy, the
Consolidated Entity does not hold or issue derivative financial
instruments for speculative trading purposes.
The Consolidated Entity’s derivative financial instruments
are not designated as a hedge for accounting purposes, and
accordingly movements in the fair value of derivative financial
instruments are recognised in profit or loss.
Investments in unlisted securities
Subsequent to initial recognition, investments in unlisted
securities are measured at fair value and changes therein are
recognised as other comprehensive income and presented
in the asset revaluation reserve in equity. Dividends are
recognised as income in profit or loss unless the dividend
clearly represents a recovery of part of the cost of the
investment. Other net gains and losses are recognised in other
comprehensive income and are never reclassified to profit or
loss. When such an asset is derecognised, the cumulative gain
or loss in equity is transferred to retained earnings.
Other financial assets
14. Financial risk management
The Consolidated Entity’s capital management and financial
risk management processes are managed as part of the wider
Goodman Group. There are established policies, documented
in Goodman Group’s financial risk management (FRM) policy
document, to ensure both the efficient use of capital and the
appropriate management of the exposure to financial risk.
Goodman Group’s treasury function is responsible for monitoring
the day to day compliance with Goodman Group’s FRM
policies and prepares reports for consideration by management
committees and Goodman Group’s Board including:
+
+
+
+
Cash flow projections over a period of at least 12 months
to assess the level of cash and undrawn facilities, and
headline gearing at each month end
Debt maturity profile, to allow the Goodman Group to plan
well in advance of maturing facilities
Interest rate hedge profile over the next 10 years, to allow
Goodman Group to manage the proportion of fixed and
floating rate debt in accordance with its FRM policy
Capital hedge position (by currency) and profile of expiring
currency derivatives, to allow Goodman Group to manage its
net investment hedging in accordance with its FRM policy.
Any significant investments or material changes to the finance
facilities or FRM policies require approval by the Goodman
Group Board.
The Consolidated Entity’s key financial risks are market risk
(including foreign exchange and interest rate risk), liquidity risk
and credit risk.
Derivative financial instruments
Investment in unlisted securities, at fair value1
2021
$M
64.4
38.2
102.6
2020
$M
2.1
34.3
36.4
1.
Principally relates to the Consolidated Entity’s 10.0% (2020: 10.0%) interest
in Goodman Japan Limited. During the year, a revaluation gain of $7.6 million
was recognised in other comprehensive income (2020: $5.5 million gain).
Refer to note 14(d) for assumptions made in measuring fair value of the
unlisted securities.
Other financial liabilities
Derivative financial instruments
2021
$M
2020
$M
89.1
48.9
89.1
48.9
(a) Market risk
Foreign exchange risk
The Consolidated Entity is exposed to transactional foreign
currency risk and net investment foreign currency risk through
its investments in Hong Kong, Japan, China, Continental
Europe and United Kingdom and also loans to related parties
in North America. Foreign exchange risk represents the
loss that would be recognised from adverse fluctuations in
currency prices as a result of future commercial transactions,
recognised assets and liabilities and, principally, net
investments in foreign operations.
Goodman Group manages foreign currency exposure on
a consolidated basis. In managing foreign currency risks,
Goodman Group aims to reduce the impact of short-term
fluctuations on earnings and net assets. However, over the
long term, permanent changes in foreign exchange will have
an impact on both earnings and net assets.
172
Annual Report 2021
Goodman Group’s capital hedge policy for each overseas region is to hedge between 65% and 90% of foreign currency
denominated assets with foreign currency denominated liabilities. This is achieved by borrowing in the same functional currency
as the investments to form a natural economic hedge against any foreign currency fluctuations and/or using derivatives such as
cross currency interest rate swaps (CCIRS) and forward exchange contracts (FEC).
As at 30 June 2021, a summary of the derivative financial instruments used to hedge the Consolidated Entity’s exposures arising
from its investments in foreign operations is set out below:
2021
Amounts
receivable
Weighted
average
exchange rate
AUD'M
AUD/HKD
83.9
5.9560
AUD'M
AUD/EUR
1,086.7
0.6214
AUD'M
AUD/USD
634.6
AUD'M
0.7092
AUD/JPY
71.9
83.4650
USD'M
USD/CNY
600.0
7.5753
Amounts
payable
HKD'M
(500.0)
EUR'M
(675.0)
USD'M
(450.0)
JPY'M
(6,000.0)
CNY'M
(4,545.2)
2020
Amounts
receivable
Weighted
average
exchange rate
AUD'M
AUD/HKD
–
–
AUD'M
AUD/EUR
803.0
0.6165
AUD'M
AUD/USD
–
–
AUD'M
AUD/JPY
–
–
USD'M
USD/CNY
500.0
7.6477
Amounts
payable
HKD'M
–
EUR'M
(495.0)
USD'M
–
JPY'M
–
CNY'M
(3,823.9)
AUD receivable/HKD payable
AUD receivable/EUR payable
AUD receivable/USD payable
AUD receivable/JPY payable
USD receivable/CNY payable
Sensitivity analysis
Throughout the financial year, if the Australian dollar had been 5% (2020: 5%) stronger against all other currencies, with all other
variables held constant, the Consolidated Entity’s profit attributable to Shareholders, excluding derivative mark to market and
unrealised foreign exchange movements, would have decreased by $36.7 million (2020: $16.3 million). If the Australian dollar
had been 5% (2020: 5%) weaker against all other currencies, with all other variables held constant, the Consolidated Entity’s
profit attributable to Shareholders, excluding derivative mark to market and unrealised foreign exchange movements, would
have increased by $36.7 million (2020: $16.3 million).
173
Goodman Group
Notes to the consolidated financial statements
Capital management (continued)
14 Financial risk management (continued)
Interest rate risk
Goodman Group adopts a policy that at all times interest rates on between 60% and 100% of the Group’s external borrowings and
derivatives (by principal) are hedged for the next 12 months. The Consolidated Entity’s interest rate risk arises from floating interest rates
on related party loans (receivable and payable) and from the floating interest rate legs of certain CCIRS. The Consolidated Entity does not
hedge its interest rate exposure on related party loans but has entered into interest rate swaps (IRS) to manage certain cash flow risks
associated with floating interest rates on its CCIRS.
As at 30 June 2021, the Consolidated Entity’s fixed and floating rate exposure (by principal) arising from its derivative financial
instruments is set out below:
Impact of derivatives
30 June 2021
Fixed rate liabilities
Floating rate – payable
Floating rate – receivable
30 June 2020
Fixed rate liabilities
Floating rate – payable
Floating rate – receivable
CCIRS
A$M
–
1,825.0
(1,877.1)
(52.1)
–
807.8
(803.0)
4.8
IRS
A$M
474.2
(474.2)
–
–
326.4
(326.4)
–
–
Net position
A$M
474.2
1,350.8
(1,877.1)
(52.1)
326.4
481.4
(803.0)
4.8
As a result of the derivative financial instruments that existed at 30 June 2021, the Consolidated Entity would have the following
fixed interest rate exposure (by principal) at the end of each of the next five financial years. This assumes all derivative financial
instruments mature in accordance with current contractual terms.
Number of years
post balance date
1 year
2 years
3 years
4 years
5 years
Sensitivity analysis
2021
2020
Fixed interest rate
(by principal)
A$M
Weighted average
interest rate
% per annum
Fixed interest rate
(by principal)
A$M
Weighted average
interest rate
% per annum
474.2
474.2
408.5
158.1
158.1
(0.47)
(0.47)
(0.45)
(0.31)
(0.31)
360.3
489.6
489.6
421.8
163.2
(0.52)
(0.47)
(0.47)
(0.45)
(0.31)
Based on the Consolidated Entity’s interest bearing borrowings at 30 June 2021, if interest rates on borrowings had been 100
bps per annum (2020: 100 bps per annum) higher/lower, with all other variables held constant, the Consolidated Entity’s profit
attributable to Shareholders would have been $10.8 million lower/higher (2020: $11.5 million lower/higher).
174
Annual Report 2021
(b) Liquidity risk
Liquidity risk is the risk that the Consolidated Entity will not be able to meet its financial obligations as they fall due. The Consolidated Entity’s
objective is to maintain sufficient liquidity to fund short-term working capital, capital expenditure, investment opportunities and dividends.
Management seeks to achieve these objectives through the preparation of regular forecast cash flows to understand the application and
use of funds and through the identification of future funding, primarily through loans from related parties in Goodman Group.
The contractual maturities of financial liabilities are set out below:
Carrying
amount
Contractual
cash flows
Up to 12
months
1 to 2
year(s)
2 to 3
years
3 to 4
years
4 to 5
years
More than
5 years
$M
$M
$M
$M
$M
$M
$M
$M
As at 30 June 2021
Non-derivative financial liabilities
Trade and other payables
Contract liabilities
Lease liabilities
Loans from related parties
Total non-derivative financial liabilities
Derivative financial liabilities
Net settled1:
Gross settled2:
(Inflow)
Outflow
Total derivative financial liabilities
As at 30 June 2020
Non-derivative financial liabilities
315.9
5.8
66.0
1,891.1
2,278.8
315.9
5.8
151.4
1,905.3
2,378.4
251.5
64.4
4.8
6.7
1.0
3.8
811.1
104.4
1,074.1
173.6
–
–
3.3
43.2
46.5
–
–
–
–
3.8
3.3
74.6
540.5
78.4
543.8
–
–
130.5
331.5
462.0
79.4
73.5
0.2
29.0
22.7
23.5
(0.3)
(1.6)
(54.7)
(123.1)
(11.5)
(17.3)
(56.1)
(22.7)
(13.0)
–
24.7
67.5
17.9
1.2
3.2
4.9
(10.1)
14.9
(28.5)
1.1
1.9
25.6
12.3
Trade and other payables
215.9
215.9
177.7
38.2
Contract liabilities
Lease liabilities
13.8
28.3
13.8
43.3
12.3
12.3
1.5
7.0
–
–
2.3
Loans from related parties
1,731.0
1,753.1
1,409.0
5.4
148.2
Total non-derivative financial liabilities
1,989.0
2,026.1
1,611.3
52.1
150.5
–
–
1.6
2.3
3.9
–
–
1.2
2.3
3.5
Derivative financial liabilities
Net settled1:
Gross settled2:
(Inflow)
Outflow
Total derivative financial liabilities
1. Net settled includes IRS and FEC.
2. Gross settled includes CCIRS.
18.5
17.2
(0.6)
(0.3)
3.2
6.2
9.8
(1.1)
–
28.3
46.8
(51.4)
54.8
20.6
(6.8)
(8.1)
(9.5)
(11.5)
(11.8)
–
–
–
–
–
(7.4)
(8.4)
(6.3)
(5.3)
(2.0)
(3.7)
54.8
50.0
175
(2.5)
31.5
27.4
–
–
18.9
185.9
204.8
Goodman Group
Notes to the consolidated financial statements
Capital management (continued)
14 Financial risk management (continued)
(c) Credit risk
Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.
The maximum exposure to credit risk on financial assets, excluding investments, of the Consolidated Entity which have been
recognised in the consolidated statement of financial position, is the carrying amount (refer to note 7).
The Consolidated Entity has a policy of assessing the creditworthiness of all potential customers and is not materially exposed
to any one customer. The Consolidated Entity evaluates all customers’ perceived credit risk.
In relation to material bank deposits, the Consolidated Entity minimises credit risk by dealing with major financial institutions.
The counterparty must have a long-term investment grade credit rating from a major rating agency. The amounts and other
terms associated with bank deposits are formally reviewed monthly.
From time to time, the Consolidated Entity also makes loans to JVs, typically to fund development projects. In making its
investment decisions, the Consolidated Entity will undertake a detailed assessment of the development feasibility and credit
risks associated with the relevant counterparties.
During the current and prior year, credit risk arising from cash and cash equivalents, trade receivables, amounts and loans due from
related parties and other receivables was not determined to be significant and no impairment losses were recognised.
The credit risks associated with derivative financial instruments are managed by:
+
+
Transacting with multiple derivatives counterparties that have a long-term investment grade credit rating
Utilising International Swaps and Derivatives Association (ISDA) agreements with derivative counterparties in order to limit
exposure to credit risk through netting of amounts receivable and amounts payable to individual counterparties (refer below) and
+
Formal review of the mark to market position of derivative financial instruments by counterparty on a monthly basis.
Master netting off or similar agreements
Goodman Group enters into derivative transactions under ISDA master netting off agreements. Under these agreements, where
certain credit events occur (such as a default), all outstanding transactions under the agreement are terminated and a single net
termination value is payable in full and final settlement.
(d) Fair values of financial instruments
Except for derivative financial instruments and investments in unlisted securities which are carried at fair value, the Consolidated
Entity’s financial instruments are carried at cost or amortised cost. The carrying amounts of the Consolidated Entity’s financial
instruments carried at cost or amortised cost were not materially different from their fair values as at 30 June 2021 and 2020.
(i) Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method (see note 1(g)):
Level 1
$M
Level 2
$M
Level 3
$M
–
–
–
–
–
–
–
–
–
–
64.4
–
64.4
89.1
89.1
2.1
–
2.1
48.9
48.9
–
38.2
38.2
–
–
–
34.3
34.3
–
–
Total
$M
64.4
38.2
102.6
89.1
89.1
2.1
34.4
36.4
48.9
48.9
As at 30 June 2021
Derivative financial assets
Investment in unlisted securities
Derivative financial liabilities
As at 30 June 2020
Derivative financial assets
Investment in unlisted securities
Derivative financial liabilities
There were no transfers between the levels during the year.
176
Annual Report 2021
(ii) Valuation techniques used to derive Level 2 and Level 3 fair values
The Level 2 derivative financial instruments held by the Consolidated Entity consist of IRS, CCIRS and FEC.
The fair values of derivatives are determined using generally accepted pricing models which discount estimated future cash
flows based on the terms and maturity of each contract and current market interest rates and/or foreign currency rates, adjusted
for specific features of the instruments.
The fair value measurement for investment in unlisted securities has been categorised as a Level 3 fair value. The following table
shows the valuation technique used in measuring fair value as well as the significant unobservable inputs used:
Type
Valuation technique
Significant
Inter-relationship between
Equity securities
+
Goodman Japan Limited
unobservable inputs
significant unobservable inputs
and fair value measurement
Discounted cash flows: The valuation
model was determined by discounting
the future cash flows expected to be
generated from continuing operations.
The future cash flows were based on
fund and development forecasts and
then estimating a year five terminal
value using a terminal growth rate
and an appropriate discount rate.
+
+
+
+
Assets under management
of $5.4 billion in year five
The estimated fair value would
increase/(decrease) if:
Average annual development
of 83,500 square metres
+
The level of assets under
management, development
Five year terminal value
growth rate of 0.38%
activity and terminal value growth
rate were higher/(lower) or
Risk adjusted post tax
discount rate of nil per annum.
+
The risk adjusted discount rate
were lower/(higher).
(iii) Reconciliation of Level 3 fair values
Carrying amount at the beginning of the year
Acquisitions
Net change in fair value – included in other comprehensive income
Effect of foreign currency translation
Carrying amount at the end of the year
2021
$M
34.3
–
7.6
(3.7)
38.2
2020
$M
28.2
0.1
5.5
0.5
34.3
15. Dividends
During the financial year, the Company declared a final dividend of 6.0 cents per share amounting to $110.8 million. This dividend will
be paid on 26 August 2021. In the prior year, the Company declared a final dividend of 4.0 cents per share amounting to $73.1 million.
This was paid on 28 August 2020.
177
Goodman Group
Notes to the consolidated financial statements
Capital management (continued)
16. Share capital
(a) Ordinary shares
Ordinary shares of the Company are classified as equity. Incremental costs directly attributable to issues of ordinary shares are
recognised as a deduction from equity, net of any tax effects.
2021 2020
Number of shares
1,847,429,255
1,828,413,236
Share capital
Accumulated issue costs
Total issued capital
Date
Details
30 Jun 2019
31 Aug 2019
30 Jun 2020
31 Aug 2020
4 Sep 2020
Ordinary shares, issued and fully paid
Balance at 30 June 2019
Shares issued to employees of Goodman Group1
Balance at 30 June 2020
Shares issued to employees of Goodman Group1
Issue of ordinary shares
30 Jun 2021
Balance at 30 June 2021
2021
SM
792.5
(0.6)
791.9
2020
SM
732.6
(0.6)
732.0
Number of shares
Share capital
$M
1,813,881,995
14,531,241
1,828,413,236
15,438,241
3,577,778
1,847,429,255
696.6
36.0
732.6
48.6
11.3
792.5
1.
During the year, the Company issued 15,438,241 (2020: 14,531,241) shares to employees of Goodman Group under the Goodman Group Long Term Incentive Plan (LTIP).
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per
share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.
(b) Equity settled share based payment transactions
LTIP
Goodman Group’s share based payments primarily relate to performance rights awarded to employees under the LTIP. These
performance rights entitle an employee to either acquire Goodman Group securities for $nil consideration (equity settled
performance rights) or, in certain jurisdictions, to receive an amount in cash equal to the value of the securities (cash settled
performance rights), subject to the vesting conditions having been satisfied.
During the year, the movement in the number of equity settled and cash settled performance rights under the LTIP was as follows:
Number of rights
2020
2021
24,921,436
5,580,560
–
(5,952,229)
(1,815,340)
21,300,216
5,221,335
4,386,501
(5,526,953)
(459,663)
22,734,427
24,921,436
–
–
Outstanding at the beginning of the year
Issued
Transferred from other Goodman Group entities
Vested
Forfeited
Outstanding at the end of the year
Exercisable at the end of the year
178
Annual Report 2021
Share based payments transactions
The fair value of equity settled performance rights at the grant date is expensed with a corresponding increase in the employee
compensation reserve over the period from the grant date to the vesting dates. The expense is adjusted to reflect the actual
number of performance rights for which the related service and non-market vesting conditions are expected to be met.
The accumulated share based payments expense of performance rights which have vested or lapsed is transferred from
the employee compensation reserve to retained earnings.
The fair value of cash settled performance rights is also recognised as an expense but with a corresponding increase in liabilities
over the vesting period. The expense is adjusted to reflect the actual number of performance rights for which the related service and
non-market vesting conditions are expected to be met. The liability is remeasured at each reporting date and at the vesting date
based on the fair value of the rights.
The fair value of services received in return for performance rights granted under the LTIP is measured by reference to the fair value
of the performance rights granted. The fair value of the performance rights granted during the year was measured as follows:
+
+
Operating earnings per security tranche: these rights were valued as a granted call option, using the standard Black Scholes
model with a continuous dividend yield
Relative total shareholder return tranche: these rights were valued using a Monte Carlo model which simulated total returns for each
of the ASX 100 stocks and discounted the future value of any potential future vesting performance rights to arrive at a present value.
The model uses statistical analysis to forecast total returns, based on expected parameters of variance and co-variance.
The model inputs for performance rights, both equity and cash settled, awarded during the current financial year included the following:
Fair value at measurement date ($)
Security price ($)
Exercise price ($)
Expected volatility (%)
Rights' expected weighted average life (years)
Dividend/distribution yield per annum (%)
Average risk free rate of interest per annum (%)
Share based payment expense included in profit or loss was as follows:
Share based payment expense:
– Equity settled
– Cash settled
Rights issued on
19 Nov 2020
Rights issued on
30 Sep 2020
16.07
18.68
–
28.08
3.8
1.61
0.21
2021
$M
44.5
79.5
124.0
15.77
17.49
–
27.21
3.9
1.67
0.25
2020
$M
29.8
27.8
57.6
At 30 June 2021, a liability of $111.2 million (2020: $51.9 million) was recognised in relation to cash settled performance rights.
179
Goodman Group
Notes to the consolidated financial statements
OTHER ITEMS
17. Notes to the consolidated cash flow statement
Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less.
(a) Reconciliation of cash
Cash as at the end of the year as shown in the consolidated cash flow statement is reconciled to the related items in the
consolidated statement of financial position as follows:
2021
$M
358.4
–
358.4
2021
$M
415.2
1.9
(1.8)
9.6
124.0
–
(164.7)
61.1
12.2
457.5
(39.5)
(93.2)
(1.5)
69.5
1.0
393.8
80.9
15.1
(16.2)
473.6
2020
$M
357.4
10.8
368.2
2020
$M
329.7
(0.2)
(24.9)
11.7
57.6
1.2
(107.0)
35.1
40.2
343.4
253.5
(123.8)
(5.3)
(163.7)
26.8
330.9
77.6
20.1
(52.4)
376.3
Cash assets
Cash classified as held for sale
Note
9
(b) Reconciliation of profit for the year to net cash provided by operating activities
Profit for the year
Items classified as investing activities
Net loss/(gain) on disposal of investment properties
Net gain on disposal of equity accounted investments
Non-cash items
Depreciation of plant and equipment
Share based payments expense
Net loss from fair value adjustments on investment properties
Share of net results of equity accounted investments
Net finance expense
Income tax expense
Changes in assets and liabilities during the year:
–
–
–
–
–
Increase/(decrease) in receivables
Increase in inventories
Increase in other assets
Increase/(decrease) in payables
Increase in provisions (including employee benefits)
Dividends/distributions received from equity accounted investments
Net finance costs received
Net income taxes paid
Net cash provided by operating activities
180
(c) Reconciliation of liabilities arising from financing activities
Derivatives
used for hedging
$M
Balance at 1 July 2019
Changes from financing cash flows
Net proceeds from loans with related parties
Payment of lease liabilities
Dividends paid
Total changes from financing cash flows
Changes arising from acquisition of entities from GL
Effect of foreign exchange movements
Changes in fair value
Other changes
Issue of shares under the LTIP
Equity settled share based payments transactions
Interest income
Interest expense
Interest paid
Dividends declared
Other movements
Total other changes
Balance at 30 June 2020
Balance at 1 July 2020
Changes from financing cash flows
Payment of derivative financial instruments
Net repayments of loans with related parties
Payment of lease liabilities
Dividends paid
Total changes from financing cash flows
Changes arising from disposal of controlled entities
Effect of foreign exchange movements
Changes in fair value
Other changes
Issue of shares under the LTIP
Equity settled share based payments transactions
New leases
Interest income
Interest expense
Dividends declared
Total other changes
Balance at 30 June 2021
6.7
–
–
–
–
19.2
(0.9)
21.8
–
–
–
–
–
–
–
–
46.8
46.8
(42.2)
–
–
–
(42.2)
–
–
20.1
–
–
–
–
–
–
–
24.7
Dividends
payable
$M
90.7
–
–
(90.7)
(90.7)
–
–
–
–
–
–
–
–
73.1
–
73.1
73.1
73.1
–
–
–
(73.1)
(73.1)
–
–
–
–
–
–
–
–
110.8
110.8
110.8
Loans (to)/from
related parties
$M
612.3
(101.0)
–
–
(101.0)
505.1
27.9
–
(36.0)
24.6
(10.2)
44.9
–
–
–
23.3
1,067.6
1,067.6
–
(83.7)
–
–
(83.7)
14.6
50.0
–
(48.6)
26.2
–
(12.7)
38.9
–
3.8
1,052.3
Annual Report 2021
Lease
liabilities
$M
34.4
–
(11.9)
–
(11.9)
12.9
–
–
–
–
–
0.9
–
–
(8.0)
(7.1)
28.3
28.3
–
–
(8.7)
–
(8.7)
–
–
–
–
–
45.9
–
0.5
–
46.4
66.0
181
Goodman Group
Notes to the consolidated financial statements
Other items (continued)
18. Reserves
Asset revaluation reserve
Foreign currency translation reserve
Employee compensation reserve
Defined benefit retirement schemes reserve
Common control reserve1
Total reserves
Consolidated
Company
Note
18(a)
18(b)
18(c)
18(d)
18(e)
2021
$M
27.3
12.7
48.3
(14.4)
(702.9)
(629.0)
2020
$M
19.7
33.5
33.4
(8.2)
(702.9)
2021
$M
27.0
4.8
40.2
–
–
(624.5)
72.0
2020
$M
19.7
–
33.4
–
–
53.1
1.
The common control reserve arises from the acquisition of entities from other members of Goodman Group under the pooling of interest method. The amount in the common
control reserve reflects the difference between the consideration paid and the carrying values of the assets and liabilities of the acquired entity at the date of acquisition.
The movements in reserves of the Consolidated Entity and the Company are analysed below:
Consolidated
Company
2021
$M
19.7
7.6
27.3
33.5
(20.8)
12.7
33.4
14.9
48.3
(8.2)
(6.0)
(0.2)
(14.4)
2020
$M
14.2
5.5
19.7
48.3
(14.8)
33.5
28.2
5.2
33.4
–
(8.2)
–
(8.2)
(702.9)
–
(702.9)
(538.1)
(164.8)
(702.9)
2021
$M
19.7
7.3
27.0
–
4.8
4.8
33.4
6.8
40.2
–
–
–
–
–
–
–
2020
$M
14.2
5.5
19.7
–
–
–
28.2
5.2
33.4
–
–
–
–
–
–
–
(a) Asset revaluation reserve
Balance at the beginning of the year
Increase due to revaluation of other financial assets
Balance at the end of the year
(b) Foreign currency translation reserve
Balance at the beginning of the year
Net exchange differences on conversion of foreign operations
Balance at the end of the year
(c) Employee compensation reserve
Balance at the beginning of the year
Equity settled share based payment transactions
Balance at the end of the year
(d) Defined benefits funds actuarial losses reserve
Balance at the beginning of the year
Actuarial losses on defined benefit superannuation funds
Effect of foreign currency translation
Balance at the end of the year
(e) Common control reserve
Balance at the beginning of the year
Acquisition of entities from GL
Balance at the end of the year
182
Annual Report 2021
19. Retained earnings
Balance at the beginning of the year
Profit for the year
Dividends declared
Balance at the end of the year
20. Investments in subsidiaries
Subsidiaries
Consolidated
Company
Note
15
2021
$M
1,287.2
408.4
(110.8)
2020
$M
1,034.8
325.5
(73.1)
2021
$M
575.6
329.9
(110.8)
1,584.8
1,287.2
794.7
2020
$M
253.7
395.0
(73.1)
575.6
Subsidiaries are entities controlled by the Company. The Company controls an entity when it is exposed, or has rights, to
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the
entity. When assessing whether the Company has power, only substantive rights (held by the Company and other parties) are
considered.
An investment in a subsidiary is consolidated into the consolidated financial statements from the date that control commences
until the date that control ceases. When an entity ceases to be controlled by the Company, it is accounted for as a disposal of
the entire interest in the entity, with a resulting gain or loss being recognised in profit or loss.
In the Company’s statement of financial position, an investment in a subsidiary is stated at cost less impairment losses.
The following list contains only the particulars of subsidiaries which principally affected the results, assets or liabilities of the
Consolidated Entity. The class of shares held is ordinary unless otherwise stated.
Significant controlled companies
Principal activities
Goodman Asia Limited
Goodman China Limited
Goodman China Asset Management Limited
Goodman Developments Asia
GJSP Limited
GELF Management (Lux) Sàrl
Goodman Management Holdings (Lux) Sàrl
Goodman Midnight Logistics (Lux) Sàrl
Goodman Property Opportunities (Lux) Sàrl SICAR
GPO Advisory (Lux) Sàrl
Goodman UK Holdings (HK) Limited
Investment and property
management services
Property management and development
management consultancy services
Investment management
Investment and property development
Investment management
Investment management
Intermediate holding company
Investment holding company
Property investment and development
Property management services
Intermediate holding company
Country of
incorporation
Hong Kong
Interest held
2021
%
100.0
2020
%
100.0
Hong Kong
100.0
100.0
Cayman Islands
Cayman Islands
Japan
Luxembourg
Luxembourg
Luxembourg
Luxembourg
Luxembourg
United Kingdom
100.0
100.0
100.0
100.0
100.0
100.0
94.0
100.0
100.0
100.0
100.0
–
100.0
100.0
100.0
94.0
100.0
100.0
183
Goodman Group
Notes to the consolidated financial statements
Other items (continued)
20 Investments in subsidiaries (continued)
Combination of entities or businesses under common control
21. Related party transactions
Where the Consolidated Entity acquires entities or businesses
from other members of Goodman Group such that all of the
combining entities (businesses) are ultimately controlled by
Goodman Group Securityholders both before and after the
combination, the Consolidated Entity applies the pooling of
interests method.
At the date of the combination of entities under common
control, the assets and liabilities of the combining entities are
reflected at their carrying amounts. No adjustments are made
to reflect fair values, or recognise any new assets or liabilities
that would otherwise be done under the acquisition method.
The only goodwill that is recognised is any existing goodwill
relating to either of the combining entities. Any difference
between the consideration transferred and the equity
“acquired” by the Consolidated Entity is reflected within equity
(common control reserve).
Similar to the acquisition method, the results of the “acquired”
entity are included only from the date control commenced.
Comparatives are not restated to present the consolidated
financial statements as if the entities had always been combined.
Related parties
(i)
A person, or a close member of that person’s family,
is related to the Company if that person:
(1) Has control or joint control over the Company
(2) Has significant influence over the Company or
(3) Is a member of the key management personnel of the
Company or the Company’s parent.
(ii) An entity is related to the Company if any of the following
conditions applies:
(1) The entity and the Company are members of the same
group (which means that each parent, subsidiary and
fellow subsidiary is related to the others)
(2) One entity is an associate or JV of the other entity
(or an associate or JV of a member of a group of which
the other entity is a member)
(3) Both entities are JVs of the same third party
(4) One entity is a JV of a third entity and the other
entity is an associate of the third entity
(5) The entity is a post-employment benefit plan
for the benefit of employees of either the Company
or an entity related to the Company
(6) The entity is controlled or jointly controlled
by a person identified in (i)
(7) A person identified in (i)(1) has significant influence
over the entity or is a member of the key management
personnel of the entity (or of a parent of the entity) or
(8) The entity, or any member of a group of which
it is a part, provides key management personnel
services to the Company or the Company’s parent.
Close members of the family of a person are those family
members who may be expected to influence, or be influenced
by, that person in their dealings with the entity.
(a) Directors’ remuneration
Directors’ remuneration (including alternate Directors)
disclosed pursuant to section 383(1) of the Hong Kong
Companies Ordinance and Part 2 of the Companies
(Disclosure of Information about Benefits of Directors)
Regulation is as follows:
Directors fees
Salaries, allowances and benefits in kind
Share based payments
2021
$M
0.7
3.7
16.1
2020
$M
0.6
3.8
13.9
20.5
18.3
184
Annual Report 2021
(b) Transactions and amounts due from related parties
JVs
GCLP
KGG
Related parties of GL and GIT
Goodman Hong Kong Logistics Partnership
Goodman European Partnership
Other related parties
Management and
development activities
Amounts due from
related parties1
2021
$M
64.9
141.7
206.6
135.2
221.9
67.0
424.1
2020
$M
67.9
41.7
109.6
255.3
323.9
18.7
597.9
2021
$M
12.6
–
12.6
42.0
36.4
10.4
88.8
2020
$M
20.4
–
20.4
56.8
20.1
9.0
85.9
1.
Includes contract assets arising from transactions with related parties.
Transactions with GL
During the year, the Consolidated Entity recognised expenses of $42.4 million (2020: $91.1 million) for services provided by a
controlled entity of GL.
(c) Financing arrangements with related parties
JVs
Loans to related parties1
Loans from related parties1
2021
$M
29.6
2020
$M
60.8
2021
$M
–
2020
$M
–
GL, GIT and their controlled entities
809.2
599.0
(1,891.1)
(1,731.0)
Related parties of GL and GIT
Goodman European Partnership
Related parties of GL and GIT
–
–
3.6
3.6
–
–
–
–
Interest income/(expense)
charged on loans to/from
related parties
2021
$M
0.3
(26.5)
–
–
2020
$M
0.3
(35.0)
–
–
838.8
663.4
(1,891.1)
(1,731.0)
(26.2)
(34.7)
1.
Loans by the Consolidated Entity to/from JVs and other related parties have generally been provided on an arm’s length basis. At 30 June 2021, details in respect of
the principal loan balances are set out below:
– Loans to GL, GIT and its controlled entities amounting to $809.2 million (2020: $599.0 million) are interest bearing and repayable on demand. The interest bearing
loans incur interest at rates ranging from 0.7% to 7.2% per annum (2020: 0.8% to 1.7% per annum).
– Loans from GL, GIT and their controlled entities are interest bearing and amount to $1,891.1 million (2020: $1,731.0 million). $806.7 million of the loans is repayable
on demand and $1,084.4 million is repayable greater than one year from the reporting date. The interest bearing loans incur floating interest at rates ranging from
0.9% to 10.6% per annum (2020: 1.0% to 4.4% per annum).
– In the prior year, a loan of $3.6 million was provided to Goodman Pyrite Logistics (Lux) Sàrl, a controlled entity of Goodman European Partnership, and incurred
interest at 6.9% per annum.
185
Goodman Group
Notes to the consolidated financial statements
Other items (continued)
22. Commitments
Development activities
23. Contingencies
Capitalisation Deed Poll
At 30 June 2021, the Consolidated Entity was committed to
$351.3 million (2020: $251.1 million) expenditure in respect of
inventories and other development activities.
Investment properties
At 30 June 2021, the Consolidated Entity had contracted to
acquire an investment property for $67.7 million (2020: $nil).
GLHK, GL, GIT and certain of their wholly owned controlled
entities are “investors” under a Capitalisation Deed Poll (CDP)
dated 23 May 2007. Under the CDP, each investor undertakes
to pay to the relevant controlled entity borrower (borrower) any
amounts owing under finance documents for the purpose of the
CDP when the borrower fails to make a payment. Any payments
by an investor to a borrower will be by way of loan to, or proceeds
for the subscription of equity in, the borrower by the investor.
United States and Reg S senior notes
Under the issue of notes in the United States 144A/Reg S
bond market, controlled entities of GIT had on issue USD and
EUR notes amounting to US$850.0 million and €500.0 million
respectively. GL, Goodman Funds Management Limited, as
responsible entity of GIT, and GLHK have unconditionally and
irrevocably guaranteed on a joint and several basis the payment
of principal and interest in respect of each of the notes.
186
24. Company level statement of financial position
Note
Current assets
Cash
Receivables
Total current assets
Non-current assets
Investments in subsidiaries
Receivables
Other financial assets
Total non-current assets
Total assets
Current liabilities
Payables
Dividends payable
Total current liabilities
Non-current liabilities
Payables
Other financial liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity attributable to Shareholders
Share capital
Reserves
Retained earnings
Total equity attributable to Shareholders
Annual Report 2021
2021
$M
167.8
126.1
293.9
1,821.9
169.8
171.8
2,163.5
2,457.4
96.0
110.8
206.8
505.2
86.8
592.0
798.8
2020
$M
169.5
306.5
476.0
1,169.1
–
124.1
1,293.2
1,769.2
–
73.1
73.1
327.3
8.1
335.4
408.5
1,658.6
1,360.7
791.9
72.0
794.7
732.0
53.1
575.6
1,658.6
1,360.7
18
19
The Company level statement of financial position was approved and authorised for issue by the Board of Directors on 12 August 2021.
Stephen Paul Johns
Director
David Jeremy Collins
Director
25. Subsequent events
There has not arisen in the interval between the end of the financial year and the date of this financial report any item,
transaction or event of a material and unusual nature likely, in the opinion of the Directors, to affect significantly the operations of
the Consolidated Entity, the results of those operations, or the state of affairs of the Consolidated Entity, in future financial years.
187
Goodman Group
188
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Securities information
Annual Report 2021
Top 20 Securityholders
As at 25 August 2021
Number of
securities
Percentage of total
issued securities
Trison Investments Pty Ltd
1. HSBC Custody Nominees (Australia) Limited
2.
J P Morgan Nominees Australia Limited
3. Citicorp Nominees Pty Limited
4. National Nominees Limited
5. BNP Paribas Noms Pty Ltd
6. Citicorp Nominees Pty Limited
7. BNP Paribas Noms Pty Ltd
8.
9. Beeside Pty Ltd Atf The Beeside Trust
10. BNP Paribas Nominees Pty Ltd Six Sis Ltd
11. HSBC Custody Nominees (Australia) Limited
12. Australian Foundation Investment Company Limited
13. UBS Nominees Pty Ltd
14. BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd
15. National Nominees Limited
16. Custodial Services Limited
17. Netwealth Investments Limited
18. AMP Life Limited
19. One Managed Investment Funds Ltd
20. HSBC Custody Nominees (Australia) Limited
Securities held by top 20 Securityholders
Balance of securities held
Total issued securities
661,497,211
575,719,739
179,518,534
72,892,779
65,122,257
33,855,552
33,514,572
16,874,053
13,192,040
10,248,121
9,549,917
6,685,000
4,179,793
3,214,030
3,065,053
3,024,649
2,546,642
2,510,153
2,425,000
2,209,960
1,701,845,055
145,584,200
1,847,429,255
35.81
31.16
9.72
3.95
3.53
1.83
1.81
0.91
0.71
0.55
0.52
0.36
0.23
0.17
0.17
0.16
0.14
0.14
0.13
0.12
92.12
7.88
100.00
Range of securities
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – over
Total
Number of
Securityholders
Number of
securities
Percentage of total
issued securities
23,031
15,941
2,998
1,706
102
43,778
8,939,504
37,146,083
21,227,837
36,666,195
1,743,449,636
1,847,429,255
0.48
2.01
1.15
1.98
94.38
100.00
There were 651 Securityholders with less than a marketable parcel in relation to 2,712 securities as at 25 August 2021.
Substantial Securityholders1
CIC (Leader Investment Corporation)
Vanguard Group
Blackrock Investment Management Limited
Number of securities
166,917,309
187,278,775
137,503,983
1.
In accordance with the latest Substantial Securityholder Notices as at 25 August 2021.
Goodman Logistics (HK) Limited CHESS Depository Interests ASX reserves the right (but without limiting its absolute discretion) to remove Goodman Logistics (HK)
Limited, Goodman Limited and Goodman Industrial Trust from the official list of the ASX if a CHESS Depository Interest (CDI) referencing an ordinary share in Goodman
Logistics (HK) Limited, a share in Goodman Limited or a unit in Goodman Industrial Trust cease to be stapled, or any new securities are issued by Goodman Logistics (HK)
Limited, Goodman Limited or Goodman Industrial Trust and are not (or CDIs in respect of them are not) stapled to equivalent securities in the Goodman Group.
Voting rights On a show of hands at a general meeting of Goodman Limited or Goodman Industrial Trust, every person present who is an eligible Securityholder shall
have one vote and on a poll, every person present who is an eligible Securityholder shall have one vote for each Goodman Limited share and one vote for each dollar
value of Goodman Industrial Trust units that the eligible Securityholder holds or represents (as the case may be). At a general meeting of Goodman Logistics (HK) Limited,
all resolutions will be determined by poll, and eligible Securityholders will be able to direct Chess Depositary Nominees Pty Limited to cast one vote for each Chess
Depositary Instrument (referencing a Goodman Logistics (HK) Limited share) that the eligible Securityholder holds or represents (as the case may be).
Securityholder approval of securities During the financial year, 13,340,317 performance rights were issued under the Long Term Incentive Plan, of which 1,730,000
performance rights were issued to Executive Directors with securityholder approval under ASX Listing Rule 10.14.
On-market buy-back There is no current on-market buy-back.
189
Goodman Group
Glossary
AASB Australian Accounting Standards Board.
ASX Australian Securities Exchange, or ASX Limited
(ABN 98 008 624 691) or the financial market which
it operates as the case requires.
AUM Assets under management: total value of properties
directly held or under management.
CPPIB Canada Pension Plan Investment Board.
Cps Cents per security.
Cpu Cents per unit.
DPS Distribution per security. Total distributions to investors
divided by the number of securities outstanding.
EPS Earnings per security.
GADP Goodman Australia Development Partnership,
an unlisted property investment vehicle specialising in the
investment of industrial property in Australia.
GAIP Goodman Australia Industrial Partnership, an unlisted
property investment vehicle specialising in the investment
of industrial property in Australia.
GAP Goodman Australia Partnership, an unlisted property
investment vehicle specialising in the investment of industrial
property in Australia.
GBLP Goodman Brazil Logistics Partnership.
GCLP Goodman China Logistics Partnership Limited,
an unlisted property investment vehicle specialising in the
investment of industrial property in China.
GEP Goodman European Partnership, an unlisted property
investment vehicle specialising in the investment of industrial
property in Continental Europe.
GFML Goodman Funds Management Limited
(ABN 48 067 796 641; AFSL Number 223621).
GHKLP Goodman Hong Kong Logistics Fund, an unlisted
property investment vehicle specialising in the investment
of industrial property in Hong Kong.
GIT Goodman Industrial Trust (ARSN 091 213 839)
and its controlled entities or GFM as Responsible Entity
for GIT, where the context requires.
GJCP Goodman Japan Core Partnership, an unlisted property
investment vehicle specialising in the investment of industrial
property in Japan.
GJDP Goodman Japan Development Partnership, a logistics
and industrial partnership specialising in the development
of industrial property in Japan.
GL Goodman Limited (ABN 69 000 123 071) and where the
context requires, its controlled entities.
GMT Goodman Property Trust, a listed property trust on the
190
Annual Report 2021
NZX managed by GMG.
GNAP Goodman North America Partnership, a logistics
and industrial partnership specialising in the investment
of industrial property in North America.
GLHK Goodman Logistics (HK) Limited
(Company No. 1700359; ARBN 155 911 149)
and where the context requires, its controlled entities.
Goodman Group or GMG Goodman Limited, Goodman
Industrial Trust and Goodman Logistics (HK) Limited, trading
as Goodman Group and where the context requires, their
controlled entities.
GUKP Goodman United Kingdom Partnership
KGIP KWASA-Goodman Industrial Partnership, an unlisted
property investment vehicle specialising in the investment
of industrial property in Australia.
KGG KWASA-Goodman Germany, an unlisted property trust
specialising in the investment of industrial property
in Germany.
Stapled The linking together of a GIT unit, a GL share and
a CDI in respect of a GLHK share so that one may not be
transferred or otherwise dealt with without the other and which
are quoted on the ASX jointly as a “stapled security”.
Stapled Security or Security A GIT unit, a GL share and
a CDI in respect of a GLHK share which are stapled so that
they can only be traded together.
NAV Net asset value: the value of total assets less liabilities.
For this purpose, liabilities include both current and long-term
liabilities. To calculate the net asset value per ordinary security,
divide the net asset value by the number of securities on issue.
NZX New Zealand Exchange Limited or New Zealand
Exchange being the equity security market operated by it,
as the case requires.
Responsible Entity Responsible Entity means a public
company that holds an Australian Financial Services Licence
(“AFSL”) authorising it to operate a managed investment
scheme. In respect of GIT, the Responsible Entity is GFML,
a wholly-owned subsidiary of GL.
S&P Standard & Poor’s: an independent rating agency that
provides evaluation of securities investments and credit risk.
Securityholder A holder of a Stapled Security. Shareholder
A shareholder of GL and/or GLHK.
Sqm Square metres.
Sq ft Square feet.
Substantial Securityholder A person or company that holds
at least 5% of Goodman Group’s voting rights.
TSR Total securityholder return.
191
Goodman Group
Corporate directory
Goodman Group
Goodman Limited
ABN 69 000 123 071
Goodman Industrial Trust
ARSN 091 213 839
Responsible Entity of Goodman Industrial Trust
Goodman Funds Management Limited
ABN 48 067 796 641
AFSL Number 223621
Goodman Logistics (HK) Limited
Company No. 1700359
ARBN 155 911 149
Registered offices
The Hayesbery
1-11 Hayes Road
Rosebery NSW 2018
Australia
GPO Box 4703
Sydney NSW 2001
Australia
Telephone 1300 791 100 (within Australia)
+61 2 9230 7400 (outside Australia)
Facsimile +61 2 9230 7444
Suite 901
Three Pacific Place
1 Queen’s Road East
Hong Kong
Telephone +852 2249 3100
Facsimile +852 2525 2070
Email
Website
info-au@goodman.com
goodman.com
Other offices
Amsterdam
Auckland
Beijing
Birmingham
Brisbane
Brussels
Chengdu
Chongqing
Düsseldorf
Guangzhou
Hamburg
Hong Kong
London
Los Angeles
Luxembourg
Madrid
Melbourne
Milan
Munich
New Jersey
192
Osaka
Paris
Pennsylvania
San Francisco
São Paulo
Shanghai
Shenzhen
Tokyo
Directors
Goodman Limited and Goodman Funds Management Limited
Stephen Johns
Independent Chairman
Danny Peeters
Executive Director
Greg Goodman
Group Chief Executive Officer
Phillip Pryke
Independent Director
Chris Green
Independent Director
Mark G Johnson
Independent Director
Rebecca McGrath
Independent Director
Anthony Rozic
Executive Director
Penny Winn
Independent Director
Carl Bicego
Company Secretary
Goodman Logistics (HK) Limited
Stephen Johns
Independent Chairman
David Collins
Independent Director
Danny Peeters
Executive Director
Company Secretary
Goodman Secretarial Asia Limited
Security Registrar
Computershare Investor Services Pty Limited
Level 5, 115 Grenfell Street
Adelaide SA 5000
Australia
GPO Box 1903
Adelaide SA 5001
Australia
Telephone 1300 723 040 (within Australia)
+61 3 9415 4043 (outside Australia)
Facsimile +61 8 8236 2305
Email
investorcentre.com/contact
Website
computershare.com
Auditor
KPMG
Level 38, Tower Three
International Towers Sydney
300 Barangaroo Avenue
Sydney NSW 2000
Australia
ASX code
GMG
Disclaimer: This document has been prepared by Goodman Group (Goodman Limited (ABN 69 000 123 071), Goodman Funds Management Limited (ABN 48 067 796 641;
AFSL Number 223621) as the responsible Entity for Goodman Industrial Trust (ARSN 091 213 839) and Goodman Logistics (HK) Limited (Company No. 1700359; ARBN
155 911 149). It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation
or needs of any particular investor. These should be considered, with professional advice, when deciding if an investment is appropriate. This document is not an offer or
invitation for subscription or purchase of securities or other financial products. It does not constitute an offer of securities in the United States. Securities may not be offered
or sold in the United States unless they are registered under the US Securities Act of 1933 or an exemption from registration is available. This document contains certain
“forward-looking statements”. The words “anticipate”, “believe”, “expect”, “project”, “forecast”, “estimate”, “likely”, “intend”, “should”, “could”, “may”, “target”, “plan” and
other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are
also forward-looking statements. Due care and attention have been used in the preparation of forecast information. Such forward-looking statements are not guarantees of
future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Goodman Group, that may cause actual
results to differ materially from those expressed or implied in such statements. There can be no assurance that actual outcomes will not differ materially from these statements.
All values are expressed in Australian currency unless otherwise stated. September 2021.